Oracle and IBM Work to Rebuild the JDE Channel
Published: April 10, 2006
by Timothy Prickett Morgan
It is safe to say that it has been a tumultuous couple of years for the users of software created by the former J.D. Edwards. The acquisition of JDE by PeopleSoft for $1.7 billion in June 2003 was upsetting to the JDE business that was largely associated with the iSeries platform, and the $10.3 billion hostile takeover of PeopleSoft by Oracle that was finalized in January 2005 was shocking to the iSeries faithful. Now, IBM and Oracle want to work together to get the JDE business back on its feet.
JDE used to be one of the largest ERP players in the world all by itself, and was by far, as the 21st century began, the largest ERP vendor peddling products on the OS/400 platform. It was a key ballast of the AS/400 and iSeries installed bases and one of the main engines for new server sales and upgrades. The JDE installed base grew to about 6,500 before all the acquisitions started, and according to Mads Toubro, who is System i global sales and development executive for the Oracle line of products at IBM, that base is still largely the same: about 4,000 of those companies run Oracle's RPG-based World suite of products, with about 2,500 running the EnterpriseOne (formerly OneWorld) suite of JDE apps. More than half of the EnterpriseOne customers are running on the OS/400 platform, says Toubro, so that means more than 5,250 customers are running JDE applications on an AS/400, iSeries, or i5 box. (If you didn't chuckle reading that sentence, either you are not a 400 nerd or you need more coffee.)
"We have not seen any significant movement of customers of either their JDE applications or their System i servers," explains Toubro, with something of a sigh of relief. "But that is not what we are after. We want to grow this business." Toubro says that the PeopleSoft and Oracle acquisitions created a lot of fear, uncertainty, and doubt, and that rather than push companies off their JDE suite or OS/400 platforms, the effect of these mergers has been to stall investments by these companies. This has not been good business for Oracle, especially when you consider that those 6,500 JDE shops account for 28 percent of its total Oracle-PeopleSoft-JDE installed base of application customers, which numbers 23,000 worldwide. While the JDE business was only bringing in $1 billion or so in sales a year, it was a very profitable business, and Oracle cannot afford to abandon these shops.
With "Project Fusion," Oracle is creating a new ERP suite that is developed in Java on the back-end and HTML and Dynamic HTML (DHTML) on the front-end. Project Fusion is supposed to encapsulate all of the three core ERP suites controlled by Oracle, and equally importantly, will be available as an upgrade to not a migration from, the former Oracle Applications, PeopleSoft Enterprise, JDE EnterpriseOne, and JDE World suites. This is a tall order for any software vendor, and particularly for a company that wants to begin shipments in 2007.
It is obviously important for IBM, and particularly the System i division, to not have this portion of the System i business just sitting idly by as Oracle mulls its options for supporting the future Project Fusion Java-based ERP suite on the System i platform. The former JDE base represents about one-eighth of the System i revenue stream, according to Toubro, which makes it the largest driver of i5/OS platform sales in terms of ERP platforms. I always knew that high availability clustering software and Domino were also big drivers of AS/400 and iSeries sales, and I suspected that upgrades from legacy platforms were also a big driver. But JDE is, in fact, the driver. "This software is by far the biggest revenue generator we have," says Toubro.
The problem is, those 4,000 World customers don't want Java; they don't want Unix, Windows, or Linux; they don't want the Oracle database; and they don't want to be left in limbo. They want as little disruption as possible, and that might--just maybe--mean an implementation of Project Fusion in RPG, and it almost certainly means Project Fusion supporting i5/OS and DB2/400 natively. Oracle has not yet, after more than 15 months, clarified what it will do to support the software stack in the System i platform, except to say that WebSphere will be an option to its own application server. If there is one thing that most World and OneWorld shops probably don't give a rat's patootie about, it is WebSphere.
To their great credit, a lot of people at IBM have been doing some fast talking, and that is why IBM and Oracle are now going to invest the funds and time necessary to rebuild a worldwide reseller channel for the former JDE applications, and they are setting 300 resellers as the target number initially. Toubro says that Oracle within the past few weeks has renewed its agreement with IBM, which will see Big Blue to support Oracle's software on the "blue stack" of IBM middleware--things with names that start with WebSphere, generally. He also explains that Oracle has re-established its own direct sales force for the JDE applications, and has come to the conclusion that the JDE-iSeries value proposition is, at least in some cases, a valid one. "Oracle is now looking at JDE on the System i5 to be the lead ERP software against SAP's push into the mid-market," says Toubro. Oracle is also doing advertising for the former JDE suites (although I haven't seen them), and is giving a 10 percent incentive to partners who push the EnterpriseOne sales force automation and customer relationship management modules. IBM and Oracle are also giving "significant discounts" on hardware and software stacks that go beyond the Solutions Edition packaging through a rebate program.
But here may be the light at the end of the tunnel. Oracle has apparently published the database specifications for the Project Fusion suite, which will allow other database makers to offer support for the software. That gives DB2/400, and therefore a native i5/OS implementation of Project Fusion, a much better chance of coming to market. "We are pleased that Oracle has opened up Project Fusion for other database players," says Toubro. "There is now tremendous openness about what needs to be done. But at this point, we cannot say DB2 will be supported."
But, there seems to be a good chance. The RPG bit is going to be tough for Oracle to swallow, much as it was for JDE itself and then PeopleSoft. I'd like to think there was hope, but Oracle really wants to code in Java and Java only. Maybe Oracle could outsource the creation of an RPG edition of Project Fusion to one of myriad third parties in the OS/400 market that have the skills? Why not give customers what they want, instead of telling them what they want? If you want to tell Toubro all about what you would like to see so he can pass the message on to Oracle, send him an email at email@example.com. He welcomes the feedback.
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