Technology Evaluation Centers

PeopleSoft - Catching Its Second Wind From The Internet Part 1: About PeopleSoft

P.J. Jakovljevic - 6/5/2001

Part 1: About PeopleSoft
P.J. Jakovljevic - June 5, 2001

Executive Summary 

PeopleSoft, Inc. is one of the leading developers of enterprise business applications, which helps governments, higher education institutions and large-to-medium sized corporations manage human resources (HR), financials, supply chain management (SCM), customer relationship management (CRM), e-Business and business intelligence data from a wide range of operating systems and hardware platforms.

From its founding in 1987 PeopleSoft grew at a breakneck pace with a number of consecutive years of doubled sales until 1998, when its sales all but stalled due to increased competition and a saturated market. 1999 and 2000 were years of changes and adjustment culminating in a company with a pure Internet platform, a new set of products, and a new assertive attitude.

Indisputably, the most prominent event and the turning point for the company was the delivery of PeopleSoft 8 in September 2000. The product is an Internet-based collection of 160 applications, with 59 new applications in the 8 release, that span well beyond PeopleSoft's HR stronghold into e-business collaborative applications, CRM, SCM, professional service automation (PSA), and analytics to name but a few.

This part of the note discusses how PeopleSoft accomplished all this change and how it intends to reap the benefits.

About This Note

This is a three part note:

  1. Part 1 contains the Vendor Summary, Trajectory and Strategy, and Major Developments during the past two years.

  2. Part 2 contains an Analysis of PeopleSoft's Strengths and Challenges.

  3. Part 3 contains the Bottom Line information with Predictions, and Recommendations for both PeopleSoft and users.

Part 3 contains links to Parts 1 and 2.

All three parts contain the Corporate Profile.

Vendor Summary 

PeopleSoft, Inc. is one of the leading developers of enterprise business applications, which helps governments, higher education institutions and large-to-medium sized corporations manage human resources (HR), financials, supply chain management (SCM), customer relationship management (CRM), e-Business and business intelligence data from a wide range of operating systems and hardware platforms.

Early History

Founded in 1987 by David Duffield and with headquarters in Pleasanton, CA, PeopleSoft is the third-ranked applications vendor with $1.74 billion in revenue in 2000 (approximately 8.5% of the global ERP market), behind SAP and Oracle. PeopleSoft grew at a breakneck pace with a number of consecutive years of doubled sales until 1998, when its sales all but stalled due to increased competition and a saturated market. Consequently, the company posted its first losing year in 1999 (see Figure 1).

Figure 1.

Figure 2.

In 1988 PeopleSoft delivered the market's first network-based human resources management system (HRMS) software. The company has since significantly broadened its software offering. In 1992, it introduced the first of a series of financial management and accounting system software products, and, in 1994, it introduced the first of a series of distribution and SCM products. Since that time, PeopleSoft has introduced several additions to its existing product lines, plus industry specific software products. These industry specific applications include manufacturing products, public sector financial management products, public sector human resources management products, student administration products for the higher education market, and human resources and financial management products for the U.S. federal government market.

In 1996 the company bought Red Pepper Software, a supply chain optimization solutions vendor, and began offering applications for discrete manufacturers. The buying spree continued with Campus Solutions (higher-education software), Salerno Manufacturing Systems (quality management software solutions), and TeamOne (implementation services for midsize businesses) in 1997.

In 1998, facing an industry wide Y2K problem-caused slowdown in demand for ERP software, PeopleSoft laid off 6% of its workforce, the first layoff in its history. Later in 1998 PeopleSoft bought Intrepid Systems (retail management software), TriMark Technologies (life insurance software) and formed a new R&D unit, Momentum Business Applications, to develop e-commerce and industry-specific software. Revenue from services surpassed software license revenue for the first time in 1998 (See Figure 1).

Recent History

In 1999, to further enhance its product line, PeopleSoft acquired Distinction Software, a SCM software provider. In the same year, Duffield hired former Oracle marketing executive Craig Conway as president and CEO. Another restructuring that eliminated more positions contributed to a hefty loss in 1999 (See Figures 1 & 3). However, the company delivered a comprehensive analytic solution to support management decision making, PeopleSoft Enterprise Performance Management (EPM) and launched PeopleSoft eStore, the first in a series of its e-Business applications, enabling organizations to sell goods and services over the Internet. Additionally, the company introduced PeopleSoft eProcurement, which allows business-to-business (B2B) procurement over the Internet.

Figure 3.

In 2000, PeopleSoft acquired The Vantive Corporation, a leading CRM software provider, and Advance Planning Solutions, a business planning and modeling software company. PeopleSoft also launched its in-house application service provider (ASP) offering, eCenter, and an online trading exchange, PeopleSoft MarketPlace. The major development in 2000 was the delivery of PeopleSoft 8, which represented a generational shift to the Internet in its software architecture.

Despite broadening its product portfolio, PeopleSoft generates more than 70% of its revenue from services that include software maintenance and support, customer education and training, and consulting. By the end of 2000 the Company had licensed system installations to over 4,500 customers in 107 countries. PeopleSoft has offices in 15 countries and over 8,000 employees. The Company's revenue primarily comes from US and Canadian markets (over 70%). The Company went public in 1992 and currently trades on NASDAQ.

Vendor Trajectory and Strategy 

It is almost sensational how much has changed in PeopleSoft's business during the last two years. New and then unknown CEO Craig Conway came aboard in May 1999 and wasted no time changing it to a competitive, bite-the-bullet culture as opposed to the proverbial touchy-feely, informal culture. This change prompted a tide of defections by those employees averse to risk-taking. Conway also significantly increased the sales & marketing effort by hiring almost 50% more sales people and he also doubled the R & D budget. PeopleSoft believes it has recently been reaping the benefits from more than a yearlong excruciating effort to achieve the following six strategic goals the management had initially laid out:

  1. Deliver an Internet-based product

  2. Deliver collaborative e-business applications

  3. Enhance CRM product offering (through the acquisition of The Vantive Corporation)

  4. Expand internationally

  5. Increase its professional service capabilities

  6. Provide ASP services.

Indisputably, the most prominent event and the turning point for the company was the delivery of PeopleSoft 8 in September 2000. The product is an Internet-based collection of 160 applications, with 59 new applications the 8 release, that span well beyond PeopleSoft's HR stronghold into e-business collaborative applications, CRM, SCM, professional service automation (PSA), and analytics to name but a few. Because it is purely Internet-based, it can be accessed through any standard Web browser, wireless phone, and personal digital assistant (PDA) without any code on the client side of applications including Java. The product also uses XML for communications between applications. For more information on the product release, see PeopleSoft 8 Launched. Anything to Write Home About?

PeopleSoft 8 was the culmination of the company's effort to introduce the Internet-based software, from the Web-enabled traditional client/server release of PeopleSoft 7.0 in 1997 and a Java-based client in PeopleSoft 7.5 release in 1998. Biting the bullet and radically re-architecting the product was not an easy decision since internally, the debate raged over whether to completely rebuild the software for the Internet, to only add new features to a 7.5 release, or to opt for a new software that would neither be Internet-based nor compatible with earlier product releases.

Like most of its competitors, PeopleSoft is hoping to thrive by focusing on Internet collaboration and extended-ERP applications. However, hoping to differ from its peers, the company embarked on the quest to provide a comprehensive suite of integrated applications that are also individually considered as 'best-of-breed' applications based on their standalone functional strengths. The company also values the openness and interconnectivity of its products by supporting main industry accepted middleware standards.

PeopleSoft's current focus is the delivery of new generation of PeopleSoft 8 CRM applications starting in June 2001, while concurrently phasing out the Vantive brand. While PeopleSoft CRM Customer Interaction Center (CIC), a solution that manages customer interactions throughout the customer lifecycle, and PeopleSoft Mobile Sales for Wireless Access Protocol (WAP) Phones solution were delivered in April 2001, the unified data integration between PeopleSoft CRM and back-office products is only expected in the second half of 2001.

The recent alliances with JustTalk and Witness Systems contribute to PeopleSoft's cutting edge endeavors in the CRM market. JustTalk is a provider of speech-interactive enterprise applications, that provides mobile professionals the ability to manage their personal and enterprise data - call management, to-do-list, memos, contact information and calendar management from anywhere, at anytime - through the telephone. Witness Systems, a quality assurance software vendor, aims to offer customers a way to measure and monitor their CRM software deployments.

The company has also been making strides into supply chain management (SCM) and business-to-business (B2B) collaboration areas. PeopleSoft is seeking to make a bigger brand name in these markets where it traditionally had low market recognition. The PeopleSoft 8 Supplier Relationship Management (SRM) suite, which should allow business partners to communicate their inventory, design, and buying plans over the Web through a roles-based, collaborative portal, was announced as generally available on May 29, 2001. As a follow up to this product, PeopleSoft plans the release in Q1 2002 of a new sourcing application, which should let buyers search for suppliers and buy direct materials online over the Web.

We also expect the company to pursue acquisitions and/or alliances for e-business infrastructure and manufacturing application providers; the acquisition of SkillsVillage, a supplier of contract service management software, being a tip of an iceberg. Additionally, PeopleSoft will invest more aggressively in sales and marketing, international business expansion through distributors, and will seek to become more vertically oriented, leveraging a number of alliances with major software/hardware providers (e.g., Sun Microsystems and IBM) and system integrators and consulting companies (e.g., CAP Gemini Ernst & Young).

Major Developments 

This is a summary of major developments for PeopleSoft during the past year with respect to the following areas:

  • Market Strategy

  • Product Development

  • Acquisitions

  • Alliances

Market Strategy

During the past year, PeopleSoft has focused its market strategy on developing a fully Web-based version of its enterprise application set and bolstered its consulting division, PeopleSoft Consulting. For more information, See SAP and PeopleSoft Announce Web Plans and PeopleSoft: No More a Humble Kid From a Rough Neighborhood?

PeopleSoft has also expanded its markets by going after small to medium enterprises (SMEs) and announcing products that appeal specifically to that market, such as PeopleSoft Supply Chain in a Box (renamed to Accelerated Supply Chain Management, in Q1 2001). For more information, see PeopleSoft Joins Hunt For SMEs and PeopleSoft Delivers Oxymoron In "Supply Chain in a Box".

PeopleSoft also ventured further into previously uncharted ERP waters, particularly with respect to manufacturing, and into global e-procurement (for more information, see PeopleSoft Manufacturing - This Time For Sure?!, PeopleSoft Takes Aim at Foods Industry, and E-Procurement in What Language?).

Product Development

Early in 2000 PeopleSoft announced new products and services as it moved into the Internet world (with PeopleTools 8), Professional Services Automation (PSA), and ASP (PeopleSoft eCenter). For more information, see The Hype About PeopleTools 8, ERP Vendors Venturing into PSA, and PeopleSoft's ASP Play.

During the year it continued with unveiling a slew of new products in its bid to maintain its current turnaround momentum. Among them were a new product for online financial settlements between companies doing business over the Internet, called PeopleSoft MarketPay, and an expansion of PeopleSoft MarketPlace exchange technology to help manage human resources, including benefits, staffing, and travel, beside traditionally handling Maintenance, Repair, and Operations (MRO) goods procurement. For more information, see PeopleSoft - Again A Force To Be Reckoned With?

Acquisition

In January 2000, PeopleSoft announced it had completed its acquisition of The Vantive Corporation, the world's second-largest independent supplier of customer relationship management (CRM) solutions. For more information, see PeopleSoft Completes Acquisition of Vantive; Vantive CRM Applications Integrate with PeopleSoft and Other ERP Systems.

Alliances

Since September 1999 when PeopleSoft announced its product Webification plans, it has concurrently pursued the strategy to embrace the Web and deliver e-commerce functionality. The partnership with Commerce One provides it with some pieces of missing functionality and infrastructure (for more information, see Commerce One Goes High, Wide and PeopleSoft).

Conclusion of Part 1 

This concludes Part 1 of a three-part note on PeopleSoft. Part 2 contains an analysis of PeopleSoft's Strengths and Challenges. Part 3 contains the bottom line information with predictions, and recommendations for both PeopleSoft and users.