PeopleSoft Revamps World for Its Mid-Market "Express" Conquest Part Four: Challenges and User Recommendations

PeopleSoft Revamps World for Its Mid-Market "Express" Conquest
Part Four: Challenges and User Recommendations
P.J. Jakovljevic - July 29, 2004

Challenges

Recently "inaugurated" as the No. 2 leading business applications provider after digesting the 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 its recently acquired product portfolio. Although the vendor has acted swiftly on assimilating its 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 and 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.

Although the World Express product is aimed at new, prospective customers (estimated 50,000 in North America), there may be an indirect importance of assuring the existing, still disheartened PeopleSoft World install base and channel of the product's brighter future. The product has undergone significant enhancements almost immediately after the merger, such as the integration with PeopleSoft EPM and the above-mentioned annual cumulative update for the release 7.3. Further, given that the integration with PeopleSoft SRM is slated for the end of 2004, and the next annual cumulative update should take place early in 2005, these events should be the best testimonials of the new owner's renewed commitment to the long neglected product line.

However, getting the market and the channel's mindset back into the more active selling of the product will not be that easy given a protracted limbo (PeopleSoft claims a few dozen new sales during 2003, without any significant orchestrated marketing and sales effort). No wonder then that the most likely torch bearing proponent at this stage will be IBM and its channel of iSeries resellers and distributors. Even pre-merger PeopleSoft and IBM have had some history since early in 2001. They announced a partnership to speed up the delivery of business applications for small and medium businesses (SMB), as PeopleSoft had early targeted IBM Business Partners to offer mid-market prospects a rapid deployment program for former PeopleSoft 8 (now PeopleSoft Enterprise) accelerated applications. The companies then announced Architecture Jumpstart, an ISO 9000 certified, rapid eBusiness deployment program designed for the fast implementation needs of mid-market customers. The pre-packaged turnkey solution included a workstation and an application and database server, all pre-bundled and offered with fixed pricing to deliver a completely installed and configured environment which includes demo, testing, training, and production databases.

Yet, it may still take some serious effort to produce a real magic bullet to attract the vast majority of smaller enterprises even with these latest initiatives. PeopleSoft needs to more efficiently mine its client base by doing a better job of selling the broadened offering, by getting its affiliate channel both excited about the product portfolio, and by upgrading the channel's ability to sell. For new customers, the vendor will still have to resolve the predicament of its association with the old, green-screen, AS/400 product. Despite IBM's efforts to counter the platform's image of being proprietary (even by renaming it into iSeries, i5, etc.), the market has been slow in warming up to it for e-business implementations. Namely, the initial price and the need for specially trained RPG development language administrators that are not that ubiquitous in the market like Microsoft Visual Basic (VB) programmers, have not really boded well for IBM's massive acceptance within the space. Moreover, overcoming the Microsoft barrier entry will likely be the major challenge, given Microsoft's ubiquitous position within the small and medium enterprise (SME) segment, particularly with products like Office, Exchange and SQL Server. Time will only tell how the equivalent counterpart products from IBM, such as Workplace, MQ Express or Connect Express will help in that regard.

This is Part Four of a four-part note.

Part One detailed recent announcements.

Parts Two and Three discussed the market impact.

Competitive Challenges

Also, as said earlier, the Microsoft-centric SMB application vendors understand this market and in addition to product offering, they have long heavily invested in recruiting, motivating, and supporting the resellers that service the segment. There are also influencers like certified public accountants (CPAs) and small and midsize accounting companies that make recommendations to their clients which packages to deploy, and Sage and ACCPAC have for decades been cultivating awareness and relationships within this community, which can be neither easily nor quickly toppled. Some of them also offer "no-frills" on-line or retail sold, entry level or "feeder" business-application packages that attract small businesses early on, such as BusinessWorks Gold, QuickBooks Premier, Peachtree, or ACCPAC Simply Accounting Pro, then these vendors provide more advanced functions and more scalable software as the small businesses grow.

Even in the case of an increased demand within the IBM technology-inclined prospective customers, PeopleSoft is not the only one "in bed" with IBM. For example, one will likely see on the standard menu a number of individual industry solutions (at least from MAPICS and SSA Global) that virtually offer similar solutions to World, ringing the similar rejuvenating changes of a web-based UI, WebSphere portal, and so on, while these products are also the incumbent veteran products in the segment. As some possible differentiation, the World Express solutions include the essential steps of the core business processes that almost any company in the targeted vertical markets would require. The configuration is designed to adapt to special customer requirements when needed, and expands to include additional functionality that is available in World Software. Tailoring the configuration will require additional consulting, but the PeopleSoft World management team believes that it will be faster and more cost-effective to tailor the existing image than to configure the entire system. This approach to implementation services gives the customer control over the amount of consulting needed to implement the software, allowing the customer to assess the relationship between cost and return on almost every significant implementation decision.

Yet, not all powerful and possibly exciting PeopleSoft Enteprise/PeopleSoft EnterpriseOne functionality that have been touted recently at the Leadership Summit (e.g., customer relationship management demand-driven manufacturing, diagnostics, predictive and prescriptive analytics, etc.) is available for World and World Express solutions, which may be a serious drawback when competing against the other vendors, which have long offered their entire suites without any disparity between solutions for bigger and smaller customers. Although PeopleSoft has been impressively moving quickly to create parallel products, transferring functionality among PeopleSoft, former JCIT's Demand Flow and former J.D. Edwards' products to fill existing gaps, many competitors offer these now within more homogenous product suites.

Therefore, the World Express solutions, while enabling PeopleSoft and its channel to offer a fixed price and fixed time implementation program in an "out-of-the-box" way, may not necessarily offer total extended-ERP functional scope, but still only a part of extended-ERP. 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. At this stage, the company officials admit only a "wait-and-see" stance to assess the need for eventual product enhancements in the above areas down the track. The situation is additionally aggravated by the fact that the World install base is still divided between the two different product releases, 7.3 and 8.1, which feature slightly different capabilities and are on different annual cumulative update tracks (e.g., the 6th annual cumulative update for 8.1 is slated for Q3 2004, whereas the 16th annual cumulative update for 7.3 is slated for Q1 2005).

Even in the case of the top-of-the-range products, both PeopleSoft and former J.D. Edwards have been somewhat remiss about their native product lifecycle management (PLM) strategy, resorting rather to the alliance with Agile Software. However, one could hardly imagine successful supply chain management without PLM collaboration, particularly within the vendor's industries of focus. Also, PLM is necessary for enabling the design for manufacture and assembly (DFM/A) and concurrent engineering concepts, which help simplification of product design as to enable smoother flowing processes, which in turn means easier production scheduling. A flattened bill of material (BOM), as a result of the product development and manufacturing processes being designed concurrently, in addition to being much easier to plan and schedule than a non-flattened multilevel BOM, has many other advantages—from reducing the production lead time to fewer parts to be picked, kitted, and handled. Not to mention that the engineering change orders (ECOs) management and the ability to quickly reflect product engineering changes in the line design are also tightly connected with PLM.

Not to mention the ongoing alignment, cross training, and integration of geographically dispersed former PeopleSoft and J.D. Edwards' sales forces, channels, and professional services. Some consolidation will have at least happened throughout the company's new global organization, while PeopleSoft wants users to be able to choose both systems and platforms that best suit them, from the Linux operating system (already generally available), via UNIX, Windows to IBM OS/400, running whatever database and hardware they wish. At this stage, the largest need for animating the likely disenchanted constituencies of World and World Express still remains.

Despite the challenges, PeopleSoft has raised the bar in providing solutions for smaller enterprises, and tier two and tier three vendors should be in for a tough battle to defend their turf, especially as they are concurrently trying to expand and modernize their products. PeopleSoft is undeniably a tenacious and persistent fighter able to endure the long hauls. On the other hand, the prospective customers can only benefit from a wider choice, may it come from either a new product like SAP Business One or a refurbished vantage product like PeopleSoft World Express.

User Recommendations

Interested customers within the above four particular industries of World Express focus should certainly consider the PeopleSoft's lower-end of the mid-market offering and carefully determine their needs and implementation time framework, bearing in mind potential problems typical with any new product releases.

Most large vendors offer their own version of SMB solutions with programs for rapid, lower-cost implementations. While their endeavors in that regard are highly commendable, the "caveat emptor" approach is still applicable. Although some smaller companies would be well off with scaled-down versions of rapidly implemented, tier one software applications, for many companies this may not necessarily be the best solution, and they should make sure that they do not sacrifice functionality or customizability for the sake of a quick implementation, since that may cost more in the long run. As more "food for thought", see Fast-path Implementations—Are They Good or Bad? and Should You Modify an Application Product?

We strongly recommend identifying your clear e-business strategy and conducting thorough comparison-shopping, at least for the sake of information leverage. Consider all options, regardless of the technological affinity. Most importantly identify what needs are "must have" requirements and a timeline for additional components. Once identified, comparison-shop and use the related information to negotiate the best price for the solution. We are generally skeptical about bold promises of speedy, trouble-free implementations and recommend that users dig deeper and conduct detailed interviews with PeopleSoft and ask for sample timelines and references from past clients who have achieved quick ROI. Conversely, question other vendors in the contest to match some elements of PeopleSoft's value proposition (e.g., a complete solution in the box, ready to run without dedicated IT staff).

The "watered down" or "dumbed-down" solution does not appear to be the case with the World Express product, and, thus iSeries-centric, less-complex make to stock, repetitive, assemble to order, and project-oriented manufacturers or enterprises that need balanced capabilities across discrete manufacturing, distribution and financials—and that have revenue between $20 million and $100 million (USD)—should put PeopleSoft on their short list. Still, existing users of PeopleSoft World product should be aware that the sexy CRM and collaborative SCM modules will be interfaced to their product through the AppConnect process-based technology, and should inquire about a more detailed product integration strategy and coexistence. While business process integration across products, data integration through a central data warehouse, and content integration through portal technology are plausible concepts that PeopleSoft has been leveraging to integrate its product lines, users should discern the depth of the integration and whether the processes like "order-to-cash" are truly working seamlessly across multiple, previously disparate applications.

At least, many manufacturers that are still "wedded" to the iSeries platform should relax due to the plausible enhancements roadmap, although the cost of maintenance is yet to be determined. PeopleSoft has managed to keep itself profitable lately primarily by leveraging service revenues, including maintenance, and by focusing sales efforts on mining its installed base. Former J.D. Edwards' customers, therefore, should not be too terribly surprised by increased maintenance costs or shorter release support cycles. Customers and prospects should watch how PeopleSoft executes its product expansion plans and its up-sell and cross-sell opportunities, given these will also affect its services' viability. PeopleSoft Enterprise and Enterprise One products are likely to experience the greatest capabilities convergence, given PeopleSoft's apparent intent to broaden the capabilities of both product lines. Therefore, question PeopleSoft's officials to obtain the firm delivery schedule of the intended offering.