Oracle’s Attitude Toward PeopleSoft Customers Revealed?

September, 2003

This Research Byte was authored by Frank Scavo, President of Computer Economics, as part of his work at our sister consulting firm, Strativa.

As part its management consulting services, Strativa provides independent software selection consulting services for organizations looking to assess legacy systems or to replace ERP, CRM, HCM, or other enterprise systems.

In a recent interview with the San Francisco Chronicle, Oracle’s Larry Ellison made an interesting, but telling, analogy in talking about Oracle’s takeover bid for PeopleSoft. Ellison objected to the questioner’s use of the phrase “hostile takeover.” Ellison said,

  • The use of the word “hostile” I find utterly fascinating because the question is: hostile to whom? If you’re renting a house in Pacific Heights, and I go to the owner and offer him $10 million for an $8 million house, that offer is not hostile. As a renter, I may feel that’s not a welcome offer, but all we’re doing is giving the owner a choice. So we want to go directly to the shareholders. The only people who consider this hostile are the renters, the managers who don’t own the company, whose jobs in fact will be lost.

Let’s see, Larry sees three parties as stakeholders in the deal: the owner of the house (PeopleSoft shareholders), the bidder (Oracle), and the renters (PeopleSoft managers). Hmmm…who is missing in this analogy? Maybe…PeopleSoft customers?

A better analogy might be a bagel shop in Pacific Heights that is being taken over by Winchell Donuts with the intention of turning it into a donut shop. The bagel shop owner gets his price, Winchell’s gets the store location, and the bagel shop managers lose their jobs. But there is one more stakeholder in this analogy: the neighborhood customers that want bagels, not donuts.

PeopleSoft’s customers have a legitimate concern that Oracle’s intention is not to better serve them but to eliminate an Oracle competitor. Ellison’s poor choice of an analogy just reinforces that perception.