SAP seeks opportunity amid Oracle-PeopleSoft conflict

This week was all about J.D. Edwards, PeopleSoft and Oracle. Now SAP wants a turn in the spotlight.

While Oracle’s hostile takeover bid for PeopleSoft puts the latter’s plans to merge with J.D. Edwards in doubt, any outcome will

change the competitive landscape for SAP AG, which most analyst firms recognize as the market share leader for enterprise resource planning and business applications.

On Friday SAP began running a national ad campaign in Canadian newspapers offering financial incentives aimed at luring its rivals’ customers to make the switch to SAP. At next week’s SAPPHIRE conference in Orlando, the firm will no doubt take advantage of the market turmoil in a similar fashion.

Computing Canada caught up with Michel Brisson, president and managing director of SAP Canada as he travelled between customer visits to get his take on the situation and SAP’s game plan.


Computing Canada: How soon did you realize you had to get this ad campaign going?

Michel Brisson: This is not a new thing for us. The Baan story is similar to the J.D. Edwards situation with regards to large competitor of ours, someone we’re always going up against. We’ve done this before (Editor’s note: SAP ran a similar campaign during Baan’s difficulties in 2000). We always have plans in case these things happen. It’s a way of expressing our position in the marketplace. We’ve done this, I would say, because we have a very high interest in responding to customer requirements in terms of their IT investments. When an IT company does not serve the marketplace correctly, we’re always the first one that’s involved, because unsuccessful projects always affect whoever’s No. 1. Customers start to perceive that integrated solutions are not ready to go.

CC: SAP recently announced extensions to NetWeaver for the manufacturing sector. Does that mean you’ll be going specifically after J.D. Edwards customers, or PeopleSoft’s as well?

MB: This is a general campaign. We strongly believe that in 99 per cent of the cases that customers — whether it’s this week or last year — would have had the SAP proposal on the table as well as the J.D. Edwards. It’s a very competitive world out there. Both PeopleSoft projects or JDE projects also included an SAP project on the table. So a customer that makes a decision usually takes into account factors other than functionality, because in the functionality aspect we’re always on the leading edge. Most of the time it’s fit or price or implementation perception that drives those decisions. I believe when things are happening out there in the marketplace, those customers revisit those decisions. “”Did we make the right choice, did they deliver according to expectations, where do we go with this?”” It’s a good occasion for us to come back to the table and say, “”Hold on.”” The reality of the project is not always the reality that you saw in the sales campaign or the RFI (request for information).

CC: What danger is there that the uncertainty this situation has created in the market will see CIOs and IT managers simply put off projects because they don’t trust any of the vendors, including SAP?

MB: I would say that the decision-making people that choose ERP always make their decision understanding there are high risks. They always analyze the stability factors and how this is going to affect the company for the next seven to 10 years, because you don’t choose ERP for a year or two. They always look back in terms of what happened in the marketplace to other companies. Because every company has to, I would say on an 18-month basis, upgrade to a new version in order to fit their requirements. So you always look in terms of what’s the viability of upgrading, is it upgradeable? And don’t forget: most of customers have multiple installations. I’d say a good majority of J.D. Edwards customers are also SAP customers. They’ll be asking themselves, “”How will I be supported for the future? How are all the investments — which are the integration pieces, the best-in-breed solutions that I have that are complementary to my J.D. Edwards or PeopleSoft — going to be affected by this game? If I have to invest and build interfaces and I do it based on certain technology, certain architecture — am I able to rely on them with the uncertainty that exists in the marketplace?””

CC: What do you think is going to happen? Will Oracle succeed in executing its takeover, and if not, how well would the integration of J.D. Edwards and PeopleSoft succeed?

MB: If you look at Gartner’s numbers, SAP is first in applications. The second player is Oracle, the third is PeopleSoft and the fourth is J.D. Edwards. If you look at it from a business perspective, J.D. Edwards and PeopleSoft would be No. 2 instead of No. 3. That would indicate Oracle would be No. 3. Now, Oracle being No. 3 is far away from what they have in terms of cultural philosophy. They have active leadership in terms of the database; that’s the pride and joy in terms of their personality. I don’t think Oracle wants to be third in anything. And if they become third, they will be trying to catch up with PeopleSoft. I see very few people saying to themselves, “”My goal in life is to pursue PeopleSoft.”” There is going to be a last game being played for Oracle never to become No. 3.

CC: What was your reaction when you heard the news about Oracle’s takeover bid last week?

MB: It made a lot of business sense. When they (Oracle) talk about applications they say they’re No. 1, because they’re combining applications with the database. Perception-wise that looks very good, and they don’t like this to be challenged.

CC: So the consolidation is inevitable at this point?

MB: Well, you know what the reality is at this point? To me, this is an expression from PeopleSoft and J.D. Edwards, a recognition that SAP has got a medium-sized solution. We always see SAP as being the No. 1 in large applications and large corporations, and we’ve claimed for the last four or five years that we have a solid position and a solid solution for the medium-sized company. That’s the space J.D. Edwards plays in. They’re saying, “”We’re not selling enough. This is why we need to get together.”” I like this. It’s a good message for me. It’s a positive message.

CC: If Oracle succeeds, you’ll still have a much stronger competitor. How will your strategy change?

MB: If Oracle succeeds, it means there would be dominance in the markets. Customers would be dealing with two major players, which would put the same emphasis on very high-value, very high ROI, very intense new product lines, very intense new products and solutions. I think the customers must be smiling and looking forward to having two steady, steady suppliers.

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