Money, Time, Efficiency?

Experts answer end-user concerns about Oracle's acquisition of PeopleSoft.
By Betty Hintch

Since the acquisition of PeopleSoft by Oracle, uncertainties about HRMS systems have been causing some HR executives, CIOs and CFOs to stay up late at night. How will system integration take place and when will support end for PeopleSoft users? And what will all of this cost in dollars as well as downtime?

Tod Loofbourrow, CEO, Authoria, Waltham, Mass., says, "Indeed, there is clearly a sea change underway in the HR software industry. While Oracle has made its intentions clear regarding its product development strategies, we're already hearing from PeopleSoft customers that have concerns about when and how to move forward with their HR technology roadmaps. Fortunately, this type of uncertainty can often bring unexpected opportunities. And I believe that there is a silver lining to this cloud of uncertainty."

Opportunities Abound
The industry predicts good news as a result of the Oracle acquisition, because the marketplace will be open to new, entrepreneurial vendors, who can offer flexible and cost-effective systems. Mike Hayes, VP sales and marketing, Ascentis Corp., says, "Smaller customers that utilize Microsoft SQL for their current core infrastructure and database deployment may begin evaluating external platforms rather than sticking with an HR solution whose future is uncertain. These smaller customers will re-evaluate mid-tier systems that have been greatly improved since the time when they made their initial investment in PeopleSoft. A certain number of companies will wind up switching software.

"Those that do switch will not only see a reduction in cost, but will experience a much more user-friendly application compared to the overly complicated systems they had been using previously. With a less complex solution, companies will see a decrease in their ongoing costs of maintenance and training.

Richard Cangemi, president of Mangrove Software Inc., Tampa, Fla., says, "Many existing PeopleSoft clients will find that their smaller HR and payroll only implementations, a staple of PeopleSoft's current client base, will be difficult to implement and maintain efficiently because of lack of economy of scale. Companies that specialize in HR and payroll solutions are a better fit in these situations and should find this course of events driving business their way."

Hayes says that there are many vendors that are ready with simple yet capable user-friendly solutions. Processes are automated, streamlined, and standardized while customers pay less for license fees and ongoing training.

Jason Averbook, CEO and co-founder, Knowledge Infusion, Danville, Calif., says, "There has never been a better time for niche vendors and other software systems to gain an audience with customers whose technology horizons have now opened up considerably. Armed with the knowledge that they are no longer strategically tied to one vendor, or to pursuing a 'preferred vendor' strategy, organizations will look at integrating solutions that can fill functional requirements and still be viable if they decide to change backbone ERP systems."

What Customers Can Expect
Averbook says, "In January, Oracle revealed its strategy for continuing to support and update PeopleSoft products. They said support programs for most users will continue until at least 2013, long after Oracle expects to start shipping its new set of modular, Java-based applications, dubbed Project Fusion. Oracle even extended support for the former JD Edwards OneWorld XE ERP package by two years. Project Fusion products are slated to ship by 2008 and will combine the best of the Oracle and PeopleSoft technologies. This next generation of applications will be organized around services-oriented architecture principles intended to make them easier to customize and extend in a customer's environment. Oracle wants to minimize the pain of upgrading applications. All of these plans are overt attempts at keeping the coveted PeopleSoft customer base."

Straight Talk on the Real Issues
Averbook says, "If they want to stay current, PeopleSoft and JD Edwards customers are going to have to abandon the products they now use. Maybe not right away, but eventually. Barring a quantum leap in implementation/upgrade tools or a migration technology miracle, ERP migrations are notoriously painful, expensive and arduous. Then there's Oracle's embrace of Java, which is clearly problematic for organizations that have standardized around Microsoft Corp.'s technology stack. In fact, Microsoft Corp. didn't waste any time in trying to win over PeopleSoft customers who might be unhappy with Oracle's purchase of PeopleSoft."

Cangemi, says, "Integration options with Oracle, PeopleSoft, and JD Edwards are viable but costly, as they exist today. I have been exposed to many integration projects for these products. ERP implementations are often completely different from one client project to the next. This often results in integration efforts that are programmed in vastly different ways from one installation to the next, even with the same combinations of vendors' systems in both cases! Can a generic approach to data exchange be created within a combined Oracle product suite? I believe that it could, but what is the motivation for Oracle to do this? Web services and standardized HR XML format's support for a generic specification for HR data exchange would make a generic data exchange seem easy to accomplish. If Oracle were to make this happen, it would definitely provide companies with real cost savings and would reduce the effort associated with system interfaces, which in the end would be good for end users. Only time will tell."

Impact of Change
Loofbourrow says, "Over the last 12 to 24 months, we have witnessed a significant pent-up demand for strategic applications that drive bottom line business value. While buyers still want to work with fewer vendors, they are looking to more specialized providers with significant HR domain expertise."

"Companies have built out product suites that address the full range of strategic workforce management processes, while still limiting the number of vendors customers need to engage. HRMS customers are increasingly discovering the benefits of decoupling strategic applications from their ERP systems.

"We've observed this growing trend within our own client base as have many analysts following the HR technology market. The benefits include access to leading-edge functionality without the need to spend millions regularly upgrading ERP systems," Loofbourrow notes.

Straight Talk from Oracle
An Oracle spokesperson, says that the company intends to protect and increase the value of PeopleSoft customers' investments. The combined companies plan to continue to enhance and support the PeopleSoft product lines until at least 2013.

For JD Edwards EnterpriseOne versions XE and 8.0, Oracle is extending support until February 2007. For PeopleSoft's other products and versions, including JD Edwards World, Oracle has adopted PeopleSoft's current retirement policies. Product support will include defect corrections as they arise, regular product enhancements, such as new reports or functionality, and certain regulatory updates.

In addition, the combined companies plan to develop and release a subsequent version of PeopleSoft Enterprise and JD Edwards EnterpriseOne over the next two calendar years. The composition of such releases will consider customer feedback and guidance from user groups.

Oracle's spokesperson continues by saying, "The combination of Oracle and PeopleSoft will benefit customers in multiple ways. First, the larger size of the combined companies will let Oracle meet customers' demands more effectively. Oracle can offer access to a full range of integrated enterprise software as you seek to streamline operations. The result is a more competitive offering in the enterprise applications market and the broader software industry.

"Second, the expanded customer base will benefit from a larger applications R&D budget that accelerates innovation. PeopleSoft customers will see investments in new development projects that might not otherwise have been funded, including within specialized verticals. In addition, the successor product set Oracle plans to develop over time is expected to bring together the strengths of both companies' products and be built on a modern, standards-based architecture."

When asked if Oracle saw any disadvantages to former PeopleSoft customers, its spokesperson said, "Oracle is committed to 100 percent customer retention and satisfaction. Because of this, Oracle has outlined an extensive product roadmap and support plan that ensures PeopleSoft customers don't need to make any migration decisions in the near future. Combining Oracle's customer commitments with the best talent in the enterprise software industry, Oracle will provide customers with greater innovation, support and expertise."

SAP Weighs In
Senior SAP HCM executive, Mark Lange says that SAP is taking the initiative to address customer concerns head-on with the launch of the Safe Passage program. Safe Passage offers full maintenance support to about 2,000 users who are running PeopleSoft and JD Edwards applications. This SAP offering will initially be directed at companies who are already joint SAP customers. SAP recently acquired TomorrowNow, a company that specializes in providing third-party maintenance and software support for the PeopleSoft customer base.

"There is a lot of work that has to happen to keep HR software current. And what TomorrowNow does is provide those services at about half the cost as the internal PeopleSoft and Oracle spend."

Under this SAP safe passage program, organizations running PeopleSoft and JD Edwards will be able to extend their IT infrastructure with the SAP NetWeaver platform, which includes connectors for JD Edwards and PeopleSoft solutions. As a result, these organizations will benefit from an integration of their entire IT landscape with one open platform that enables flexible business processes across the entire company.

"The prime responsibility of a software vendor is to mitigate a customer's risk. We are enabling a sense of security and safety about what customers are going to be supported with over time, Lange says.

Conclusion
Loofbourrow says, "My advice to PeopleSoft customers is to seize the opportunity to explore your HR technology vendor options and find your safe harbor. Take a proactive, analytical approach and make sound strategic cases for the solutions that will drive top business value for your organization. And carefully evaluate all your technology options, ERP, best-of-breed, and otherwise, before making your final decision."

Betty Hintch is the editor of Human Capital.