Event Summary
On January
3, 2000 PeopleSoft Inc. announced it had completed its acquisition of The Vantive
Corporation, the world's second-largest independent supplier of customer relationship
management (CRM) solutions. The transaction was completed December 31, 1999
with the issuance of approximately 28 million shares of common stock and options
to purchase common stock, and is anticipated to be accounted for as a pooling-of-interests.
The acquisition of Vantive makes PeopleSoft the only enterprise software company
offering a full suite of CRM products that integrate tightly with PeopleSoft
and other major back-office applications. Organizations can now turn to PeopleSoft
for an industry-leading, functionally rich CRM solution, or take full advantage
of PeopleSoft's front-office CRM and eCommerce software, back-office Enterprise
Resource Planning (ERP) applications, and business intelligence applications
for strategic decision-making. PeopleSoft's end-to-end eBusiness solutions integrating
customer information, transactional data, and business intelligence provide
companies with a 360-degree view of their business.
"PeopleSoft is now the only company in the world that can truly provide organizations
worldwide with a proven, enterprise solution for eBusiness," said Craig Conway,
president and chief executive officer at PeopleSoft. "The Vantive acquisition
adds more than 30 widely used products in use by more than 860 customers around
the world to PeopleSoft's repertoire of nearly 100 products for ERP, eCommerce
and business intelligence. Together PeopleSoft and Vantive will continue to
provide flexible enterprise solutions that fulfill customer needs."
The
acquisition expands PeopleSoft's customer base to more than 4,000 organizations,
further strengthens its global presence in more than 90 countries, and adds
nearly 500 Vantive employees from all levels to its workforce. Organizations
can now use eBusiness solutions offered by PeopleSoft to sell, support and service
customers through any channel of interaction -- the Web, call center, e-mail,
or directly through sales and service representatives. These solutions include
The Vantive Enterprise, an integrated software suite that leverages the Internet
to increase sales, marketing, call center, field service, help desk and Web
service effectiveness. Vantive and PeopleSoft products -- as well as products
from other enterprise software vendors -- can be integrated today via Vantive
QuickConnect, a packaged integration solution announced in August 1999. In addition,
Vantive's software was integrated with PeopleSoft's software earlier this year
under PeopleSoft's Open Integration Framework program, allowing real-time communication
of customer information between Vantive and PeopleSoft enterprise applications.
Market
Impact
Although PeopleSoft had floundered on CRM for some time before its decision
to buy Vantive, we believe PeopleSoft finally is now in a strong position to
compete head on with the other top ERP vendors. By acquiring a complete and
one of the best CRM product suites available, PeopleSoft leapfrogged most of
its competitors, who are still struggling to deliver a patchwork of internally
developed or acquired CRM modules. Nonetheless, we expect the usual painstaking
effort associated with merging two large companies. The mitigating factor, however,
is the fact that PeopleSoft and Vantive had a marketing and development partnership.
The technical problems are likely to arise with the future integration of the
two products into a common interface and code base, which, we believe, PeopleSoft
will have to undertake in order to continue to compete with the other top ERP
vendors in the combined ERP and CRM space. In addition, management has yet to
resolve the challenge of poor marketing acceptance of PeopleSoft's manufacturing
applications.
User
Recommendations
As a summary of our recommendations in TEC's note on PeopleSoft (See TEC Technology
Research Note: "PeopleSoft
- Are Business Intelligence and e-Commerce Enough?" September 1st, 1999),
PeopleSoft is a very strong contender in enterprise application selection processes
within the following industries: utilities, service providers, financial institutions,
public sector, insurance, and higher education. It should be on a short list
in any selection where HRMS system and financial modules are the main pillars
of an enterprise application. Furthermore, organizations that are in an early
stage of evaluating PeopleSoft should negotiate incorporation of new CRM applications
components by bundling them into the contract now at negotiated license fees,
and be wary of expected application integration problems.