Microsoft Lures PeopleSoft Customers with Discounts

by Alex Woodie

Sensing an opportunity to scoop up some disaffected PeopleSoft customers, Microsoft on Monday announced a new program to encourage users to ditch their PeopleSoft ERP systems for new the Microsoft Business Solutions ERP system by providing double-digit discounts on license fees, as well as other incentives. The software giant is also seeking to attract partners and ISVs that base their business on PeopleSoft, which has now been officially acquired by Oracle.

Microsoft is offering PeopleSoft customers discounts of 25 percent off the initial software license fee for their new MBS ERP system, as well as a quarter off the cost of their first year's maintenance. The deal is good through June 22, and it's directed at the 12,750 users of PeopleSoft's World, EnterpriseOne, and Enterprise ERP packages.

PeopleSoft Enterprise customers in the United States and Canada should consider the Great Plains ERP package, the software giant says, while the Axapta suite is the best fit for users of World and EnterpriseOne applications, which PeopleSoft acquired from J.D. Edwards in 2003. The offer is also good for customers that want to use the Navision and Solomon ERP suites.

"Businesses that use PeopleSoft technology are facing some difficult choices today," says Doug Burgum, senior vice president at Microsoft, in reference to Oracle's somewhat-less-than-crystal-clear roadmap for each of the three acquired PeopleSoft product lines. "Today's announcement is evidence of our ongoing commitment to working closely with PeopleSoft customers and partners to help them migrate to Microsoft Business Solutions."

The program also offers migration planning guides to help customers evaluate applications and platforms, as well as data migration tools to shorten the total implementation time. Microsoft says it will rely on experienced systems integrators who specialize in PeopleSoft migration, and help get PeopleSoft resellers up to speed by offering them technical training from partners already skilled in PeopleSoft application conversions.

Microsoft's capability to play in the upper echelon of the ERP market is not a sure thing, however. During the government's antitrust trial seeking to block Oracle from taking over PeopleSoft last year, Burgum testified that Microsoft had no plans to compete with Oracle, PeopleSoft, or SAP for the largest ERP accounts, and that it would concentrate its sales efforts on midsized businesses with fewer than 500 employees and on its database software.

While there are plenty of midsized businesses (or divisions of large companies) that fit this demographic and could conceivably find a comfortable seat on a Microsoft ERP product (assuming they're ready to throw away the investments they've already made in their current database and ERP systems, which is asking a lot), it would seem that Microsoft simply does not yet have the experience needed for PeopleSoft's largest Enterprise customers, such as ABN AMRO or Sprint. Even some of the EnterpriseOne and World users are probably outside of Microsoft's range, including Cargill, which, with sales close to $60 billion last year and 101,000 employees, is one of the world's largest privately held companies. The company has close to 10,000 seats of the World ERP software and a seat on PeopleSoft's old World customer advisory council.

Microsoft is taking direct aim at IBM's iSeries, a proprietary server that, while it has seen better days, evokes near fanatic devotion from those who use it. Late last year, Microsoft launched the Midrange Alliance Program, an association of business partners with tools and services geared toward helping users of iSeries server move some, or all, of their applications from the OS/400 environment to the Windows environment (see "Microsoft Extends Laurel Branch to IBM Midrange Shops"). Earlier in 2004, Microsoft launched a similar program targeting S/390 and zSeries users.

Microsoft realizes it faces an uphill battle attracting World and EnterpriseOne shops. "Just about everybody we talk to loves their AS/400," said Tim O'Brien, Microsoft's senior product manager for platform strategy, in 2004. "They're loyal and have stuck with it through thick and thin. But they realize they need to move forward and extend the investment."

The World application runs only on OS/400, while a good chunk of EnterpriseOne customers run their ERP system on OS/400 servers, too. In terms of EnterpriseOne, licenses were split fairly evenly between OS/400, Unix, and Windows at this time last year, according to information from PeopleSoft. Since then, the company has rolled out support for Linux, licenses for which were probably selling quite well, along with licenses for Windows machines, if industry trends are any indication.