Last week, I attended the PeopleSoft Connect conference in Anaheim, as an industry analyst representing Computer Economics. My main objective was to size up the just-completed acquisition of J.D. Edwards by PeopleSoft. With a few small concerns the merger/acquisition seems to be off to a good start.
Expansion, Not Consolidation
PeopleSoft is spinning the deal not as a “vendor consolidation” but as an “expansion,” with the two vendors complementing the other’s industry strengths and customer installed base. The story is that PeopleSoft targets large enterprises, whereas JDE targets the mid-market. PeopleSoft strength is in vertical industries such as healthcare, financial services, education, and people-oriented services (e.g. professional services), while JDE focuses on manufacturing/distribution, asset-intensive industries, and project-oriented service businesses (e.g. construction).
Buzzword Alert: IP
Conference speakers continually emphasized the “IP” (“intellectual property”) that the two companies bring to each other, to the extent that by the end of the week the term was becoming a bit tired. Simply put, the deal brings together some really smart people, from both companies that are experts in certain industries and business functions. For example, PeopleSoft has undisputed thought leadership in human capital management and supplier relationship management, and JDE claims experts in supply chain management and project accounting.
Buzzword aside, PeopleSoft is right to focus on this point. Successful mergers in the software industry are delicate efforts. The major assets have feet, and keeping those assets from walking out the door is no doubt a prime objective. Based on my interviews with both PeopleSoft and JDE representatives last week, I think the odds for success are good. In one-on-one discussions, managers show a genuine excitement about the merger. Many presentations during the week were delivered jointly by PeopleSoft and JDE experts, who demonstrated respect for each other and acknowledged the expertise each brings to the deal.
PeopleSoft is going out of its way to strongly signal that it intends to continue development and support for all three product lines:
- PeopleSoft Enterprise (the PeopleSoft 8 product line)
- Enterprise One (the network-based JDE One World product)
- PeopleSoft World (the host-based JDE World Software, which runs on the IBM iSeries platform).
The last thing PeopleSoft wants to do is give any hint to any JDE customer that they will see reduction in support or development dollars. This is understandable. However, at some point, PeopleSoft will have to make some choices. Does it really make sense to put as much development resources into the JDE HR module when PeopleSoft’s functionality is so much stronger?
I note that PeopleSoft has already put the PeopleSoft tools developers and the JDE tool developers into one group, headed by Jesper Andersen, recently brought over from Pivotal. Evolving into one tool set would be the start of any effort to reduce duplication between the product lines. Ultimately, it makes a great deal of sense for the three product lines to share some common functionality, such as HR and business analytics. But PeopleSoft can be excused from talking about such choices at this early stage.
A Questionable Branding Decision
My one concern is with PeopleSoft’s decision to rename the former JDE One World product as PeopleSoft Enterprise One. The problem is that the name implies that the product is for small companies, even an entry-level system. As evidence, I submit that the name is similar to SAP’s offering for small companies, SAP Business One. Furthermore, PeopleSoft may be inadvertently contributing to this misunderstanding with its own (and to my mind, artificial) distinction between PeopleSoft’s strength in large companies and JDE’s success in the mid-tier.
To my mind, there is no intrinsic limitation in JDE’s One World product scaling to large organizations. The fact that JDE has had success in the mid-tier does not preclude the use of One World by large organizations, and in fact JDE claims a number of large enterprises as clients. One World is a multi-entity, multi-facility, multi-currency system with world-class functionality. Hopefully, at some point, PeopleSoft will re-brand the product to remove the implication that it is for “small companies.”
Concerning the merger of PeopleSoft and JDEâ¦ so far so good.