PeopleSoft Canada to Oracle: It’s over

TORONTO — PeopleSoft Canada executives said Tuesday that a move by the U.S. Department of Justice last week to file an antitrust suit against Oracle Corp.’s bid to buy the company is the final chapter in the 10-month saga.


really the official conclusion to what we really put behind us in October,”” said Pete Smith, regional vice-president PeopleSoft Canada Global Services. PeopleSoft Canada officially opened new headquarters in downtown Toronto on Tuesday.

“”We’ve had tremendous support from customers and clearly the justice department has had a lot of feedback from PeopleSoft customers,”” said Smith. “”No doubt there was a cloud there for awhile but it has become thinner and thinner over time.””

Last Thursday the Department of Justice in Washington D.C. announced it was filing a civil antitrust lawsuit in U.S. District Court in San Francisco to block Oracle’s attempt to buy PeopleSoft. The Attorneys General of Hawaii, Maryland, Massachusetts, Minnesota, New York, North Dakota and Texas also joined the lawsuit.

The argument being made is that if the merger were to take place, it would eliminate competition between the leading providers of enterprise HR and financial management software, leaving only the merged company and SAP providing product to the marketplace at that level.

It was last June that Larry Ellison and Oracle Corp. first announced the then US$7.5-billion hostile takeover bid for PeopleSoft. To shore up strength on its end, PeopleSoft began a $350-million buy-back of its own stock.

Canadian vice-president and managing director Andy Aicklen said the news stateside at the end of last week prompted “”a big sigh of relief.””

And while it is not unprecedented that a case like this can be overturned, it usually doesn’t happen, says Warren Shiau, IDC Canada software analyst.

“”There are a lot of states behind this – enough that it would be hard to see how Oracle could get this reversed with all this pressure,”” said Shiau.

In Shiau’s opinion, much of the drama over the possible merger ended last summer when PeopleSoft instituted its share buy-back program.

“”When there was no cap on the price they would pay and the stock price was already sitting above Oracle’s offer at the time, at that point I think everyone in PeopleSoft started to put things behind them. Oracle had no stake at that point in the shares tendered to it,”” he said.

Even when Oracle raised the share price offer from $19 to $26, Shiau said there was still the question of the Department of Justice weighing in.

“”They (Oracle) were still intent on doing it so the DOJ had to come down with a ruling on it.””

Aicklen said the climate created by the proposed takeover by Oracle — when PeopleSoft was working through a transition period of its own acquisition of J.D. Edwards — only made PeopleSoft a “”more effective software company.””

“”To have somebody hanging over your shoulder like that helped us to stay focused,”” said Aicklen.

While customers had a lot of questions about the looming bid by Oracle – many who were customers of the recently-acquired J.D. Edwards product line – Smith and Aicklen say those questions have largely gone away.

One of those customers was Keith Campbell, vice-president finance and CFO of BPB North American Services Inc. of Mississauga, Ont., a customer of J.D. Edwards since 1999. But Campbell said, at the time he was more concerned about what PeopleSoft’s intentions were for the J.D. Edwards line he was currently using.

“”When PeopleSoft announced it would protect the product line it made us feel a lot more comfortable,”” said Campbell who claims his department has the lowest IT costs in the BPB group. “”I was glad to see that after the acquisition PeopleSoft kept the architecture of the JDE product.””

The U.K.-based BPB, a manufacturer of wallboard and plaster building operating in 50 countries, had implemented J.D. Edwards OneWorld (now EnterpriseOne), with a complete ERP implementation including HR and payroll. They are now looking at upgrading to PeopleSoft’s HR tool set, but have not made a decision.

PeopleSoft is also pursuing a new channel strategy, something Aicklen admits, “”just doesn’t happen overnight.”” He said PeopleSoft is looking for two more channel partners to assist with the delivery of systems such as EnterpriseOne (formerly OneWorld from JDE).

Looking ahead, Aicklen said PeopleSoft Canada expects to see some growth in terms of the mid-market and new installations with the federal government for human capital management, expansion in Quebec and the health-care sector as well as solution upgrades to existing customers.

Trends that Smith identified for 2004 include customer profitability management, which involves helping customers pull metrics from throughout the enterprise and the extended supply chain or supplier relationship management that involves Web services.

RFID applications are also expected to draw interest, but to date only major U.S. customers such as Wal-Mart have expressed interest, said John Gibson, director of solution consulting for PeopleSoft Canada.

Smith also noted that work is being done to incorporate user groups from J.D. Edwards into PeopleSoft’s International Customer Advisory Board.

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