Oracle Lays Out Plans to Fuse Its Three ERP Suites
by Timothy Prickett Morgan
With the deed finally done, the top brass at Oracle now have the challenging job of proving that the hostility the company showed in acquiring PeopleSoft does not extend to the companies using PeopleSoft and J.D. Edwards ERP suites or to the code embodied in those products. This has not been an easy task, to be sure, but Oracle's executives have done a pretty good job of convincing its new customers and employees that they have their best interests, if not at heart, at least in mind.
No one ever called Oracle chairman and founder Larry Ellison an idiot, so even if he has held a reserve of animosity toward PeopleSoft's products and employees, he would never in a million years show it. And there is no question that, as bitter rivals in the ERP space, both PeopleSoft and Oracle loathed each other as tough competitors usually do. But Ellison is a shrewd and smooth talker, and is often amusing with his sarcasm, so you would never see animus unless he wanted you to. But more important, as he said in his presentation to Oracle's employees and customers last week, this is no different from a player in the NFL changing teams and changing jerseys and playing with--instead of against--old rivals. Whether they like it or not, the ERP industry, Oracle's new collection of employees (who hail from three different cultures), and 23,000 customers (who come to Oracle through those different cultures), simply have to get over it. Oracle won the battle with PeopleSoft, and now it has to make good on its promises, or it will suffer dire economic consequences. Oracle plays to win, so you can bet it is going to work hard to make PeopleSoft and JDE customers happy, because if it doesn't they will balk and walk.
Being the chief visionary and mouthpiece for Oracle, Ellison got to speak first at the Oracle-PeopleSoft event "Better Together." He rolled out his vision for the combined Oracle and PeopleSoft companies, as well as Oracle's plans for enhancements to its much bigger portfolio of products and the company's attitude toward its new customers and employees. Ellison didn't waste a second of time, and got straight to the point in his first sentence, pointing to a chart with Oracle, PeopleSoft, and JDE suite names on it. (We are quoting Oracle executives at length to get exactly what they said on the record, just in case they, for some crazy reason, backtrack in future years on their commitments.)
"We're going to continue to develop all three application product lines for some years to come," said Ellison. "I know there was a lot of concern early on, and it was reported in the press that if we were successful in acquiring PeopleSoft, the first thing we would do is cancel all the PeopleSoft products and tell all the customers that they had 48 hours to move to Oracle products. We didn't think that was a very good idea, since we didn't actually know how to implement that. Just the opposite is true, and nothing could be further from the truth."
When Oracle announced its hostile takeover of PeopleSoft 19 months ago, just after PeopleSoft announced its intent to acquire J.D. Edwards (then the largest OS/400 ERP application vendor in the world), Oracle said that it would support PeopleSoft's product for the next decade. Ellison said last week that he intended to make good on that promise, and that the clock had started ticking at that moment in early 2003. So PeopleSoft Enterprise, EnterpriseOne, and World customers will have support from Oracle for their products at least until 2013. Moreover, Ellison said that not only would customers be able to get support but also that Oracle would not be pulling any shenanigans like raising support fees or freezing support of particular products on specific mixes of operating systems and databases. (If Oracle does otherwise, please do not hesitate to contact us.) Ellison said that Oracle would continue to support IBM's DB2, DB2 UDB, and DB2/400 databases, IBM's WebSphere middleware, Microsoft's SQL Server database, and BEA Systems' WebLogic middleware and Tuxedo transaction monitoring software within.
John Wookey, the new head of Oracle's application unit, said that support for EnterpriseOne XE, which was set to expire in February, has been extended to February 2007. Wookey also said that support for EnterpriseOne 8.0, which was set to expire in July 2006, has been extended to February 2007 as well. This was a generous move by Oracle, going beyond what PeopleSoft planned, and one that was clearly intended to engender trust among the JDE installed base. Oracle has promised to finish development on PeopleSoft Enterprise 8.9, and it will (in about a year) release Enterprise 9.0, which is a tweak of the 8.9 code base with new features and functions that is expected sometime in 2006. The company's JDE programmers will finish EnterpriseOne 8.11 and World A.73, and will begin work on EnterpriseOne 8.12 and provide enhancements, both of which will also be available in 2006. All of these ERP suites will be coded using existing tools and with support for existing operating systems and databases. Oracle's development team will continue to work on Applications 11i 10 in 2005 and will start on Applications 12i in 2005, also for delivery in 2006. The World suite will be enhanced every 12 to 15 months, once in 2005 and once in 2006, with a vague promise for "and beyond" from Ellison.
Ellison says that Oracle has sent out job offers to 90 percent of the PeopleSoft development team at PeopleSoft behind the PeopleSoft and JDE suites, which amounts to about 3,000 people, and that there are another 5,000 ERP developers who hail from Oracle. This is a very large number of developers. But not all of them will be working on feature enhancements in the three suites; a portion will be pulled aside for a project to create a unified ERP suite, called Project Fusion.
With Project Fusion, Oracle intends to provide Oracle Applications customers, as well as PeopleSoft Enterprise, EnterpriseOne, and World customers, with a new ERP suite that is developed in Java on the back-end and HTML and Dynamic HTML (DHTML) on the front-end. This Project Fusion suite will take the expertise of all of the three core ERP suites now controlled by Oracle (including lots of depth in different industry sectors) and make a single, united ERP suite that all customers can upgrade to, not migrate to. So mark these words, PeopleSoft people: "It should be a normal upgrade process," said Ellison. "An automated upgrade, not a conversion." This is a tall order, particularly for the four different application suites Oracle wants to upgrade to.
The first pieces of Project Fusion should begin appearing in 2006, along with new technologies called data hubs and transaction bases. Then, in 2007, initial Fusion modules will begin appearing, and in 2008 the full Fusion ERP suite, and the successor to the four current ERP suites controlled by Oracle, is expected to be ready to attack that base of 23,000 customers. At least, that is Oracle's plan.
Oracle's president, Charles Phillips, made it clear that iSeries customers in particular should not be nervous, and this was the only platform singled out during the "Better Together" event by name. "We've been trying to reach out to IBM for the past 18 months," he explained, saying that he has been in contact with Buell Duncan, a former general manager of the iSeries and the lead evangelist for IBM's Software Group these days. "We're going to be supporting the iSeries platform; we know that this is important to them. Our future products will run on the iSeries products, not just the products that we are shipping today. Our relationship with IBM will hopefully get a lot better going forward."
The OS/400 platform was very big part of the JDE business; about one third of new license sales were on OS/400, and about half of the support money came from the OS/400 base at the time PeopleSoft launched the merger with J.D. Edwards. Support was such a big piece of JDE's revenue stream that a little less than half of its $800 million or so in sales each year came from the OS/400 base in one way or another. (That's a very rough estimate.) Once PeopleSoft acquired JDE, the OS/400 part of the combined company was significantly diluted, since PeopleSoft was installed predominantly on Windows and Unix servers. Now that the OS/400 business from JDE is nested inside Oracle, which accounted for about $5.5 billion in ERP, SCM, and CRM sales in 2004, if you added them together, that several hundred million dollars in business is, to put it bluntly, noise in the data. That's about 7 percent of Oracle's total application software sales when the sales of Oracle, PeopleSoft, and JDE suites are added up.
Supporting the iSeries is not the same thing as pushing it--something that JDE forgot, PeopleSoft never learned, and Oracle very likely will not do. This is perhaps the best reason for someone else to own the RPG-based World software suite: someone who knows and likes RPG and DB2/400. But Oracle is not about to let it go. It needs the World support money to help pay for its $10.6 billion acquisition over the next eight and a half years.