The executive team of new PeopleSoft addressed a tough audience of financial and industry analysts. We got to ask them tough questions on the JD Edwards/PeopleSoft merger.
“This merger is about product expansion, not consolidation.” This is Craig Conway’s (CEO of PeopleSoft) commitment and mantra to customers and investors. His analogy is the Jaguar, purchased by the Ford Motor Company. Ford did not eliminate the Jaguar-it made it better.
PeopleSoft’s objective is to take aim, first and foremost, at SAP. And this is a welcome strategy, not just to PeopleSoft investors, but also to organizations like IBM, who are looking for an alternative to SAP to present to their customers.
Strong encouragement to attend the PeopleSoft Connect Conference in California by the new executive team has yielded over 500 attendees from the JD Edwards users, added to the over ten thousand-plus existing PeopleSoft attendees.
The combined assets are the topic of the day. Here are some strategy highlights for JD Edwards’ users:
- What JD Edwards users get:
- Customer Relationship Management
- Supplier Relationship Management
- App Connect and other integration technologies
- Significant web capabilities
- Advance financial modules, pricing etc.
- Business intelligence and reporting
- What PeopleSoft users get:
- Process Manufacturing
- Asset Management
- Supply Chain Management
Financially, it looks like a good play. The combined company forecast is $1.7B-creating a huge service base with huge service growth opportunities. The PeopleSoft consulting engine seems to have been more cost effective for both PeopleSoft, as well as its customers, and they will put that methodology to work for the JDE community.
Now, there will be cuts in expenses and headcount. After all, the deal has to yield some efficiencies. Here is where they will come from:
- G&A expense and headcount.
- IT infrastructure expense.
- Consolidation of sales management.
- Facility reduction-these firms both had offices in most of the same cities across the world.
- Marketing expense-half the brochures, less advertising etc.
- Offshore development and support for consulting, providing cost effective 7×24 delivery capabilities.
PeopleSoft’s very articulate CFO was quite specific about the numbers of reductions in these areas-which is sad for employees, but good for customers. Virtually no reductions were coming from development and consulting-the key components of a software firm that add value to their clients.
Ram Gupta, PeopleSoft’s top product and strategy executive, provides a strong message on how the integration path will bring the key products together. PeopleSoft and JDE both had tools that import and export from best of breed modules-integration brokers. In addition, JDE has a Supply Chain data base that brought all the data together as an information base for supply chain simulations, reporting etc. It is capable of taking a variety of data uploads, including XML. The speed by which the development group is committed to delivering is impressive, leaving no doubting space for customers to consider defecting to other ERP players. Over the next year, the key modules will be transparent.
Both install bases should start saving their pennies for upgrades, because all the new functionality will be swiftly available. Some of these modules make ChainLink’s Best-in-Class list, so you will want to put modules like SRM and CRM in your budget, as well as some great financial and pricing software.
Users’ apprehension during an acquisition is the constant fear of migration – will I have to migrate to keep my business supported? Craig Conway says not. PeopleSoft will continue support of IBM platforms, the heart of the JDE install base.
Is this a story that ends well for the good guys? If history is any indicator, yes. To date, the big acquirers of ERP install bases, SSA, CA and now China.com, have kept the installed bases well supported.
So now is the time to get your messages across to the PeopleSoft execs of your on-going needs by getting involved in user organizations, etc. A well-informed user group is your best strategy!