Oracle Pledges Conditional Support for JDE Apps, iSeries
March 8, 2004 Alex Woodie
At a meeting of J.D. Edwards users last week, Oracle pledged to support the two JDE product lines, competing databases, and the iSeries server, if its acquisition of PeopleSoft goes through. JDE professionals have expressed concern over what a second acquisition in two years would do to their IT investments, but the conditional nature of Oracle co-president Charles Phillips’ commitment might have raised more questions than it answered.
The fact that Oracle sent its new co-president to the Quest West conference, in San Diego, California, while PeopleSoft declined to send a delegate is a sign of the bad blood between PeopleSoft and Quest, the largest independent JDE user group, with 15,000 paying members. In a nutshell, PeopleSoft is forcing Quest to acquiesce to its user group rules if it wants the benefit of PeopleSoft resources and personnel at events, while Quest is fighting fiercely to remain independent and outside of PeopleSoft’s direct control.
Phillips treaded lightly on the subject of PeopleSoft-Quest relations. “I’m not here to bash PeopleSoft. I’m here to talk about the potential relationship between Oracle and the Quest user group,” he said. Phillips seemed aware that he had the potential to score some points with JDE users by portraying a welcome home at Oracle for Quest (Oracle maintains ties with independent user groups, and so does PeopleSoft, for that matter), but mostly he stuck to the business at hand, which was putting JDE users’ fears at ease, should Oracle’s hostile bid for PeopleSoft go through.
These fears were piqued last June, when Oracle initiated its hostile takeover bid for PeopleSoft just days after the announcement of the PeopleSoft-J.D. Edwards merger. At the time, Oracle’s chairman and chief executive officer, Larry Ellison, said that if Oracle’s bid for PeopleSoft went through, it would stop selling PeopleSoft applications and put them into maintenance mode, effectively forcing PeopleSoft customers to move to Oracle’s applications over the long haul. This put the kibosh on PeopleSoft’s pipeline, which was probably the effect that Ellison had desired. Oracle has since softened its stance on eventual euthanasia for PeopleSoft products, but that hasn’t stopped PeopleSoft customers from wondering what Oracle would do if the acquisition went through.
Phillips told JDE users last week that Oracle’s intentions are entirely above board, portraying the company as a benevolent keeper and ongoing developer of other companies’ technologies. “We currently have support for customers running a broad range of non-Oracle applications, so we have experienced working with competitors’ products to solve customers’ problems,” Phillips said, pointing specifically to Oracle’s 1995 acquisition of Digital Equipment’s Rdb relational database for the OpenVMS operating system, and the on-going support Oracle has provided for that product over the last nine years. “Remember, most of the applications running on top of our database were not written by Oracle. We’re used to supporting multiple applications not from us, and we work with whoever it is to solve customer problems.”
At this point Phillips got specific. “Also, we’d work with other database vendors to provide world-class support to JDE customers. We’re committed to support the IBM iSeries hardware platform,” he said. While he didn’t specifically say Oracle would support the iSeries native database, DB2/400, he most likely meant it, since the OS/400 operating system, the DB2/400 database, and the iSeries hardware are closely intertwined. It would be quite a leap to think that Phillips was referring to the recently announced beta version of the Oracle 9i database, which runs on Linux and PowerPC (and thus the iSeries). While new licenses of EnterpriseOne (the new name for JDE’s OneWorld ERP suite since PeopleSoft ate the company) are split fairly evenly among Unix, Windows, and iSeries servers, PeopleSoft World (the new name for the RPG-only WorldSoftware ERP suite) only runs on OS/400 servers. Many World ERP customers have no intention of leaving this suite and do not consider EnterpriseOne an upgrade so much as a forced march. They believed this for eight years when JDE was a stand-alone company, and the merger with PeopleSoft has not changed their minds.
There should be an asterisk next to Oracle’s stated support for JDE applications, because it wasn’t unconditional. “We’ve worked pretty hard to try to provide as much clarity as possible about our intentions about the PeopleSoft product line,” Phillips said. “But we are working with limited information, and that’s a fact. We don’t have access to as much information as I’d like to have. We don’t have access to PeopleSoft’s current product roadmap regarding the J.D. Edwards product portfolio, and that portfolio could change significantly as time goes on before we can conclude this transaction.”
Phillips said Oracle hasn’t seen any public plans about the length or quality of product support, maintenance, or enhancements for the EnterpriseOne and PeopleSoft World product lines. “That leaves open, of course, the distinct possibility that PeopleSoft could make a number of decisions that change the direction of one or several product lines. Software products can morph into many derivatives through decisions to merge, integrate, or substitute products. Some of them are good business decisions, and some are not.”
For the record, PeopleSoft has made public statements about its commitment to support the JDE products. In September 2003, the company announced that it would provide indefinite technical support for the products, just as JDE had been forced to do for the WorldSoftware product years earlier, following steady pressure from World users. When contacted for this article, PeopleSoft gave the following commitment to the PeopleSoft World application: technical support; patches and fixes support; upgrade script support; and tax and regulatory support with no end in sight. “PeopleSoft will continue to offer this policy to PeopleSoft World customers for as long as IBM continues to support the iSeries platform,” a PeopleSoft spokesperson said.
Phillips found an unlikely ally in his assertion that PeopleSoft’s JDE plans are not as clear as they could be. Barbara Schmit, Quest’s president and the chief information officer of Computer Network Technologies in Minneapolis, Minnesota, also questioned the extent of the plans PeopleSoft has made available for its JDE customers. “Speaking as a customer, my company did not ask to become a PeopleSoft customer. But we would very much like to know what plans PeopleSoft has, as they know them today,” she told attendees at the Quest West event. “We would like PeopleSoft executives to directly address the deepening concerns of an important segment of their customer base, on this issue and other issues, such as maintenance value.”
In the end, Oracle’s intentions are good, Phillips said, whether you’re a PeopleSoft Enterprise shop (what used to be called PeopleSoft 8, which is the company’s own suite) or a JDE shop. “We just don’t see any scenario in which it makes sense for us to acquire thousands of customers–billions of dollars’ worth–and then take actions that alienate them. That’s not a wise investment or a good way to spend $9.4 billion,” he said. “I also understand the economic, career, and emotional ties each of you have to the J.D. Edwards product line. This isn’t my first J.D. Edwards industry meeting. Your strong user community is a valuable asset that we’d like to work with.”
As an enterprise software analyst with Morgan Stanley, Phillips helped take J.D. Edwards public in 1997. However, some of the comments that Phillips made at his previous job could come back to haunt him. In 2002, Phillips wrote that the market for enterprise-level financial management software “is dominated by an oligopoly comprised of SAP, PeopleSoft, and Oracle. The market is down to three viable suppliers,” according to an article in last week’s Wall Street Journal.
Last week, Phillips made the case that, outside the upper echelon of the largest companies in the world, there are plenty of other enterprise software providers besides SAP, Oracle, and PeopleSoft. “While the public companies get a lot more attention from the press and analysts, and may be better known, people in the industry, people in this room, know there are many other alternatives. Virtually everyone in this room has heard of, or perhaps even used products, from companies such as Lawson Software, SSA Global, Geac, and others,” he said. “The bottom line is this: The market for enterprise applications is highly, highly competitive. Plus, it’s a buyers market. They can ensure they receive an aggressive price, regardless of the size of company or organization. But the courts will decide that.”
Oracle’s case hinges on how broadly the Department of Justice defines the ERP software market. Up to this point, the DoJ has sided with the way Phillips thought while employed as a Morgan Stanley analyst, and its preliminary report several weeks ago indicated that it thinks competition would be hurt by allowing Oracle’s hostile bid of PeopleSoft to go through.
It would have been encouraging to hear that Oracle wanted to provide a better home to JDE users than PeopleSoft is planning to give. To be sure, Phillips was blunt about Oracle’s support for the iSeries and the JDE base, but still left Oracle’s commitment open-ended, since the PeopleSoft takeover is still far from being done. The fact remains that the JDE portion of this PeopleSoft hostile takeover is small fry compared with the larger battle Oracle is waging against PeopleSoft.