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PeopleSoft Strategy a Good Deal for JD Edwards Customers

Written By: Ann Grackin
Published On: September 17 2003

Event Summary

The executive team of the new PeopleSoft addressed a tough audience of financial and industry analysts this day. We got to ask them the tough questions on the JD Edwards/PeopleSoft merger.

"This merger is about product expansion, not consolidation" is Craig Conway's (CEO of PeopleSoft) commitment and mantra to customers and investors. His analogy is the Jaguar, purchased by the Ford Motor Company. Ford did not eliminate the Jaguar—it made it better.

PeopleSoft's objective is to take aim, first and foremost, at SAP. This strategy is welcome, not just to PeopleSoft investors, but also to organizations like IBM who are looking for an alternative to SAP to present to their customers.

Strong encouragement to attend the PeopleSoft Connect Conference in California by the new executive team has yielded over 500 attendees from the JD Edwards (JDE) users, added to the over 10,000 existing PeopleSoft attendees.

User Recommendation

The combined assets are the topic of the day. Here are some strategy highlights for JDE's users:

  • What JD Edwards users get:
    o Customer relationship management
    o Supplier relationship management
    o App Connect and other integration technologies
    o Significant web capabilities
    o Advanced financial modules, pricing, etc.
    o Business intelligence and reporting

  • What PeopleSoft users get:
    o Process manufacturing
    o Asset management
    o Supply chain management

Financially, it looks like a good play. The combined company forecast is $1.7B (US)—creating a huge service base with huge service growth opportunities. The PeopleSoft consulting engine seems to have been more cost effective for both PeopleSoft as well as its customers, and they will put that methodology to work for the JDE community.

Now, there will be cuts in expenses and headcount. After all, the deal has to yield some efficiencies. Here is where they will come from:

  • G&A expense and headcount
  • IT infrastructure expense
  • Consolidation of sales management
  • Facility reduction—these firms both had offices in most of the same cities across the world
  • Marketing expense—half the brochures, less advertising etc.
  • Offshore development and support to consulting, providing cost effective 7x24 delivery capabilities

PeopleSoft's very articulate CFO was quite specific about the numbers of reductions in these areas—which is sad for the people, but good for customers. Virtually no reductions were coming from development and consulting—the key components of a software firm that add value for clients.

Ram Gupta, PeopleSoft's top product and strategy executive, provides a strong message on how the integration path will bring the key products together. PeopleSoft and JDE both had tools that import and export from best of breed modules—integration brokers. In addition, JDE has a supply chain database that brought all the data together as an information base for supply chain simulations, reporting, etc. It is capable of taking a variety of data uploads including XML. The speed by which the development group is committing to delivering this is impressive, leaving no doubting space for customers to consider defecting to other ERP players. Over the next year the key modules will be transparent.

Both install bases should start saving their pennies for upgrades, because all the new functionality will be swiftly available. Some of these modules make ChainLink's Best-in-Class list, so you will want to put modules like SRM and CRM in your budget as well as some great financial and pricing software.

A user's fear during an acquisition is the constant fear of migration—will I have to migrate to keep my business supported. Craig Conway says not. PeopleSoft will continue to support the IBM platforms at the heart of the JDE install base.

Conclusion

Is this a story that ends well for the good guys? If history is any indicator, yes. To date, the big acquirers of ERP install bases, SSA, CA, and now China.com, have kept the installed bases well supported.

So now is the time to get your message across to the PeopleSoft execs about your on-going needs by getting involved in user organizations, etc. A well-informed user group is your best strategy!

 
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