PeopleSoft Revamps World for Its Mid-Market "Express" Conquest Part Three: Strengths

Strengths

Recently "inaugurated" as the No. 2 leading business applications provider after digesting former J.D. Edwards & Company, PeopleSoft, Inc. (NASDAQ: PSFT), has been making decisive moves to deliver a number of new, and 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.

Recent announcements that reflect this are

• PeopleSoft World Express, one of the industry's most comprehensive solutions for smaller businesses with annual revenues between $20 million and $100 million (USD), on May 3, at COMMON 2004, the IBM iSeries user conference.
  
  
• 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),on March 18 at CeBIT 2004.
  
  
• Further extensions of the longstanding partnership with IBM (NYSE: IBM) announced during PeopleSoft 2004 Leadership Summit which expands 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 on May 18.

For details, see Part One.

The vendor's solutions within enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), enterprise portals, business intelligence (BI), and supplier relationship management (SRM) functionality provide a wide scope of features, and very few smaller vendors can provide tightly integrated applications of this magnitude under one umbrella. Furthermore, PeopleSoft has one of the strongest product technology in terms of scalability, and support for almost all industry relevant platforms and middleware standards, with Web service standards like XML, simple object access protocol (SOAP) and universal description, discovery, and integration (UDDI) being already embedded within their latest product releases, such as has been the case with the PeopleSoft's AppConnect platform.

Yet, even for the upper mid-market, the pre-configured tier one PeopleSoft Enterprise solutions remain complex applications, and the Internet architecture and new intuitive interfaces can mitigate that only so much. This perception of complexity remains ammunition that the incumbent tier two vendors will continue to exploit in order to hinder bigger brethren's attempt to penetrate their traditional stronghold. Furthermore, not all powerful functionality (e.g., SRM or product lifecycle management [PLM]) would be readily available for many of those pre-configured solutions, which may be a serious drawback when competing against the solid tier two vendors which have long-offered their entire suites without any disparity between solutions for bigger and smaller customers (e.g., Intentia, IFS, QAD , SSA Global, MAPICS or Glovia). The "Accelerated Solutions" or "All-in-One Solutions", while enabling large vendors and their channel to offer a fixed price and fixed time implementation program in a modular way, may sometimes not necessarily offer total extended-ERP functional scope. By the time the customer puts together modules to build a full collaborative enterprise system for a mid-market company, and then adds up the multiple implementation time and cost, all the touted benefits might have been annulled in some instances when incumbent mid-market vendors cover all the bases with their well-entrenched offering.

Thus, it is not difficult to justify the former PeopleSoft's "accelerated" mid-market initiatives to be gradually supplanted by selling the genuine PeopleSoft EntepriseOne product within its native, upper mid-market segment, where it has long successfully given run for the above-mentioned tier two solutions' money. Moreover, tackling the lower market segment has proven to be a much tougher nut to crack for several reasons. The main reason would be that this is the home ground of the likes of Microsoft Business Solutions (MBS) (see Microsoft Keeps on Rounding up Its Business Solutions), the Sage Group, whose US subsidiary is called Best Software, and which has recently acquired Softline and ACCPAC (see Will Sage Group Cement Its SME Leadership with ACCPAC and Softline Acquisitions?). The list does not stop here, given the likes of Exact Software (see Exact Software—Working Diligently Towards the "One Exact" Synergy), or Epicor Software, which has lately had its share of recovery and subsequent acquisitions (see Epicor Conducts Its Own ROI Acquisition Rationale) and which is soon to be merged with another SMB stalwart, Scala. Finally, there are a number of other highly specialized and newcomer smaller companies like SYSPRO, Intuit or NetSuite catering to specific industries for accounting and manufacturing systems, while also building simple homegrown systems to handle functions like CRM or sales force automation (SFA).

The above vendors understand this market and have thus gained the market and mind share, and loyal customers. In addition to product offering, they have long heavily invested in recruiting, motivating, and supporting the value-added resellers (VARs) that service the segment. Thus, trying to sell simplified versions of mySAP Business Suite, PeopleSoft Enterprise/PeopleSoft EnterpriseOne or Oracle E-Business Suite, without a serious re-engineering of these products, has not worked so far in the lower-end of the market.

This is Part Three of a four-part note.

Part One detailed recent announcements.

Part Two began a discussion of the market impact.

Part Four will cover challenges and make user recommendations.

Target Markets

However, with PeopleSoft World and World Express, PeopleSoft offers enterprise applications whose strengths are functional breadth and balance across manufacturing, distribution, and financial modules. The products are particularly well suited for make-to-stock (MTS) discrete manufacturing and industrial distribution, while they are also a good fit for less-complex hybrid batch process or discrete repetitive and assemble-to-order (ATO) manufacturers. For consumer-oriented distribution in this target market, the product has possibly the best balance of transaction functionality across the entire order fulfillment and order-to-cash business processes. In the project-related and engineer-to-order (ETO) industries, its strength might be more on the financials modules rather than on manufacturing, though, yet it is robust and widely deployed in that industry.

The product's functionality goes beyond traditional ERP to include human resource (HR) and human capital management (HRM); computerized manufacturing maintenance systems (CMMS) and enterprise asset management (EAM); and product data management (PDM). While these might not be industry leading, as in the case of its bigger sibling products, they should suffice the requirements of the targeted prospective customers.

Furthermore, while the above incumbent SMB vendors' knowledge of their customers' business is reflected in product interfaces, relatively uncomplicated functionality, attractive price points, and by making application programming interfaces (APIs) available to external developers and independent software vendors (ISVs) to help integrate their primarily accounting-based products with vertical market extensions provided by their partners, J.D. Edwards offer the differentiating trait of selected vertical focus that comes directly from its own expertise (i.e., over 1,000 distribution customers, over 1,100 manufacturing customers, and over 250 homebuilder and construction customers worldwide). Having delivered this functionality centrally has an inherent advantage in avoiding disparate product releases, upgrades, and synchronizations between the vendor and multiple ISV partners. Before releasing the product, PeopleSoft has done a thorough due diligence by gauging its functional capabilities versus the likes of MBS Great Plains and MBS Solomon (see Solomon Stands the Test of Time Despite Changing Masters). The conclusion was that the product has been competitive, to say the least, given its history and more than adequate (i.e., by no means "watered down") functionality for the market segment.

Most of the above SMB incumbent competitors have also embarked on major projects to converge disparate functionality within several acquired product lines into new generation of business applications. While these undertakings are still largely a lengthy work-in-progress (WIP), the promise is within unified modern architectures that should allow resellers to sell extensions to the applications, while preserving the migration path for the foundation accounting and back-office components. PeopleSoft World does not have that conundrum given the time has long come for IBM to leverage its credibility, market recognition and open standards support of its WebSphere product bundle to enter the lower-end of the market.

Contrary to iSeries, the WebSphere platform might not have had a tremendous acceptance by SMEs, in part because, like iSeries it has had a higher initial price level and technical complexity, but IBM has also initially lacked an SME-focused marketing effort for the product. The IBM Express line (which curiously coincides with World Express moniker), which repackages some of the most successful WebSphere's components, especially web application server (WAS), portal and business integration server, however, has the potential of a product with aggressively reduced cost and the complexity of middleware, and which should represent a solid foundation for mid-market e-business strategies. PeopleSoft touts that, within three years, the TOC of World Express should be at least half of its Microsoft Windows-based counterparts, given higher software quality and system availability, and almost non-existent instances of viruses, "DLL hell", occasional rebooting, and "blue screens of death" on the iSeries platform.

This concludes Part Three of a four-part note.

Part One detailed recent announcements.

Part Two began a discussion of the market impact.

Part Four will cover challenges and make user recommendations.