PeopleSoft Revamps World for Its Mid-Market "Express" Conquest Part One: Recent Annoucements

Event Summary

Having all but prevailed in the still ongoing tug-of-war hostile acquisition attempt by Oracle (see Frantic Merger-Mania Spiced Up With Vendettas Leaves Customers Anxious), PeopleSoft, Inc. (NASDAQ: PSFT), recently "inaugurated" as the No. 2 leading business applications provider after digesting former J.D. Edwards & Company, has been making decisive moves to deliver a number of new or refurbished solutions, in a great part by leveraging the recently acquired product portfolio. Although the vendor has acted swiftly on assimilating the former competitor (see PeopleSoft Gathers Manufacturing and SCM Wherewithal), these recent initiatives might show us that the vendor has moved even farther from the digestion stage into a full-blown execution and productivity phase.

One of the moves took place on May 3, at COMMON 2004, the IBM iSeries user conference, when PeopleSoft announced PeopleSoft World Express, one of the industry's most comprehensive solutions for smaller businesses with annual revenues between $20 million and $100 million (USD). The solution also exhibits vertical focus and is thus available for industrial manufacturers, wholesale distributors, homebuilders, and construction companies. Developed exclusively on the IBM iSeries platform, PeopleSoft World Express builds on twenty years of enterprise applications innovation, strong customer satisfaction, and the reliability of its progenitor—the former J.D. Edwards WorldSoftware (now PeopleSoft World) suite. With this rejuvenated offering, PeopleSoft hopes to be able to deliver a comprehensive solution to an entirely new market segment—one that demands low maintenance solutions and a rapid return on investment (ROI), without sacrificing their need for rich functionality.

To that end, PeopleSoft World Express includes

• The ample suite of PeopleSoft World applications that provides the foundation for somewhat "lighter" PeopleSoft World Express with PeopleSoft World Financials, PeopleSoft World Distribution, PeopleSoft World Manufacturing, PeopleSoft World Human Resources, and PeopleSoft World Project Management.
  
  
• The new solution is configured with fifty-one industry-specific business processes, including returning an item to a supplier; performing product costing and item introduction; purchasing an inventory item; managing accounts receivable balances; and so on. These embedded business processes should enable small businesses to implement the solution relatively quickly with a reasonably rapid ROI. As mentioned earlier, the templates are currently tailored for customers in the industrial manufacturing, wholesale distribution, homebuilding, and construction industries. For example, the suite for construction companies includes a job costing process that lets companies define the complex project job, such as the building of a bridge, and then define and track all the costs associated with that job.
  
  
• PeopleSoft distributors will provide user training and implementation services for the PeopleSoft World Express solution. The distributors are certified by PeopleSoft and have comprehensive industry knowledge and implementation skills.
  
  
• The product runs exclusively on IBM iSeries, one of the world's most reliable and cost-effective business computing platforms.

PeopleSoft World Express will be generally available in North America in the second quarter of 2004, while it is planed to be introduced in countries in Europe and Asia Pacific throughout the next two quarters. In addition to English, the software is currently available in Japanese, French, Italian, Spanish, and German.

This is Part One of a four-part note.

Parts Two and Three will discuss the market impact.

Part Four will cover challenges and make user recommendations.

PeopleSoft World Enhancements

The announcement came at the heels of the March 18 announcement at CeBIT 2004, when PeopleSoft announced a new release of PeopleSoft World that included more than 280 new features and enhancements that span the product family's human capital management (HCM), supply chain management (SCM), and financial management (FM) applications, and a new web-based user interface (UI). The announcement marked the first release of PeopleSoft World under the PeopleSoft brand name and underscored the new owner's commitment to PeopleSoft World customers, which have for many years been disconcerted owing to the former owner's treatment of the product as ageing, legacy technology. This new release, PeopleSoft World A7.3 Cumulative Update 15, has been generally available since March 31, 2004, and is available at no cost to PeopleSoft World customers on a current maintenance agreement with PeopleSoft.

Some more notable new features and enhancements to PeopleSoft World include

• New HTML User Interface—PeopleSoft World users, both power and casual users as well as customers and partners, now have anytime, anywhere access to critical business information through an Internet browser. By automating many repetitive navigation tasks found in a data capture-productive, character-based environment, the web-based interface should enable PeopleSoft World users to take advantage of productivity tools like integrated calendars and automated field formatting.
  
  
• Manufacturing and Distribution Management—Sales order demand information can now be included throughout the forecasting processes, which should increase supply chain visibility and improve planning and forecast accuracy.
  
  
• Financial Management—New features allow users to fairly quickly respond to organizational changes, streamline balancing and reconciliation with enhanced reporting capabilities, simplify management of fixed assets, and leverage enhancements to the cash basis accounting functionality.
  
  
• Human Capital Management (HCM)—The product meets new regulatory requirements for SUI (State Unemployment Insurance) and provides employers with faster, more accurate assessments of employee benefit and accrual amounts.
  
  
• Integration with PeopleSoft Enterprise Performance Management (EPM)—New integration between the PeopleSoft Enterprise and PeopleSoft World products consolidates customer data from PeopleSoft World onto PeopleSoft's enterprise warehouse. As a result, PeopleSoft World customers can now leverage the EPM applications with their World data.

Expansion To the SMB Market Worldwide

The above moves are parts of the longstanding partnership that has been further extended on May 18. Namely, in a move to dramatically expand PeopleSoft's reach in the small and mid-size business (SMB) market worldwide, PeopleSoft and IBM (NYSE: IBM) announced during PeopleSoft 2004 Leadership Summit the plans to expand their global alliance by enabling IBM's expanding SMB reseller channel (see IBM Express-es Its Candid Desire for SMEs) to offer PeopleSoft applications. PeopleSoft and IBM pledge to deliver jointly developed, industry-specific hardware and software solutions, and will make specific solution bundles available to resellers.

The new initiative is expected to add hundreds of IBM resellers to PeopleSoft's channel efforts, as the expanded channel relationship will deliver jointly developed, pre-integrated hardware, software and services offerings through regional solution providers. Additional elements will include joint cooperative marketing to drive application software leads to the channel, and a joint advertising campaign to position and promote channel partners and the combined PeopleSoft and IBM solutions in local markets. The two companies also plan to leverage IBM's Small and Medium Business Advantage program to provide sales incentives, marketing tools and resources, training, and demonstration capabilities to the SMB channel partners.

PeopleSoft and IBM also announced an industry-tailored offering for tier two and tier three automotive suppliers that will be delivered through the new channel relationship. This announcement builds on the two vendors' Life Sciences and World Express initiatives announced earlier this year. Namely, the new IBM Automotive Solution offers PeopleSoft EnterpriseOne applications running on the IBM eServer xSeries technology, along with pre-integrated IBM middleware and industry-specific best practices from IBM consulting.

The new solution promises to enable automotive companies to become demand driven, whereas in the past, manufacturers have had to choose between being customer focused or operationally efficient. Demand-Driven Manufacturing, an initiative that has been extensively touted by PeopleSoft during its recent Summit, is the ability to deliver any product, in any configuration, at any quantity to meet customer demand at significantly lower costs to the manufacturer, driving the higher levels of profitability. PeopleSoft claims to be the only enterprise applications vendor to currently deliver a complete demand-driven manufacturing solution—from customer demand to supply chain planning (SCP) to manufacturing planning and production to in-bound supply—all operating in real-time. With its extended IBM alliance, these capabilities should now be within the reach of small and mid-sized businesses around the world.

The strength of this alliance is supported by the remarkable price performance improvements PeopleSoft applications have reportedly achieved running on the new IBM eServer i5 series. Namely, in a real world SMB environment, PeopleSoft EnterpriseOne Rapid Start running on an IBM eServer i520 supported 60 percent more users at 40 percent less cost than the same configuration on previous iSeries boxes. For PeopleSoft World Express, the i520 supported the same number of users for up to 40 percent less hardware cost. Even under demanding conditions, the i5 series with PeopleSoft maintains its high performance levels, given that recent tests running a mixed workload of web serving, collaboration, and PeopleSoft World have demonstrated the ability of the i5 to deliver sub-second response times even at 97 percent system utilization.

The companies also intend to collaborate on a new Linux program that will extend the benefits of these SMB solutions to the open source operating environment, building on the recently announced availability of EnterpriseOne on Linux. IBM and PeopleSoft will conduct a series of enhanced performance characteristic tests across a variety of Linux server configurations, for the IBM eServer xSeries, providing customers with the information they need to guide their Linux application strategies. In addition, IBM and PeopleSoft plan to launch a series of joint promotions and incentives highlighting EnterpriseOne, DB2, WebSphere, and IBM eServer xSeries on Linux, beginning with a joint marketing initiative and concentrating initially on Asia Pacific and Europe.

This concludes Part One of a four-part note.

Parts Two and Three will discuss the market impact.

Part Four will cover challenges and make user recommendations.