Oracle vs. PeopleSoft
Ryan Martin
Sean Ogle
Tiare Packard
5/16/06
Overview
Who are Oracle and PeopleSoft? What is ERP? Why did Oracle acquire PeopleSoft? What has happened since the acquisition?
Oracle
Founded in 1977 Larry Ellison is CEO One of largest
developers of “Database Management Systems”
PeopleSoft
Founded in 1987 by David Duffield
Provides software to thousands of large companies and governments
Specializes in ERP solutions
Enterprise Resource Planning (ERP) Management Information
Systems that integrate all or part of a business’s operations or production/service
“Back office” systems Best practices and re-
engineering process Very expensive to implement “Productivity Paradox” applies
Why Does Oracle Want PeopleSoft? Oracle is #1 in databases, but losing to
SAP in ERP systems PeopleSoft had the capabilities Oracle
needed Oracle wanted to gain market share and
ensure long-term growth
Oracle Needs PeopleSoft! Oracle’s need for ERP leads it to wanting
to acquire PeopleSoftLack of options
PeopleSoft does not want to be bought
Becomes tactical fight
PeopleSoft’s Reaction
Buys JD Edwards - Friendly merger$1.7BBecomes bigger and more expensive to
acquire
PeopleSoft’s Reaction Cont’d.
Poison pill1. Reduced support = 2x to 5x fees for purchase
2. Stock trick = dilute stock to take away ownership
3. Power shift towards directors rather then shareholders
Oracle’s Reaction
Insists and raises bid - Hostile takeoverOriginal bid $16/shareJune 03- 2 weeks later $19.50/shareFeb 04- Raise 33% to 9.4B or $26/share
DOJ Gets Involved
Feb 2004 Department of Justice: Anti-trustSAP and Microsoft
Involvement? Sat back and watched Denied because software companies that make
ERP software for "mid-market" customers also compete for those same "large complex enterprises."
After DOJ Rejects
May 04- Lower to $7.7B or $21/shareNov 04- $9.4B or $24/shareDec 04- Final bid @ $10.3B or $26.50/share
PeopleSoft accepts @ 100% above original bid
Oracle’s Concerns
Largest merger in software industry history
Concerns over keeping PeopleSoft’s culture and employeesFounder David Duffield had “Kill Oracle” pep
rally
Results of the Oracle|PeopleSoft Merger
January 2005: Oracle laid off nearly 50% of PeopleSoft’s 11,000 employees90% of PeopleSoft product development and
support employees retained Project Fusion
The final integration of Oracle and PeopleSoft/J.D. Edwards products
Final product available in 2008
Oracle: Trouble in Paradise
Two issues to deal with
1. Database computing is a mature technology
2. Competition between established providers is fierce and smaller competitors are entering market
1. Mature Technology
Traditional database firms such Oracle and IBM Struggle to gain new customers Systems designed for “structured” data
Running Models Number Crunching Forecasting
Time to innovate, but how? Day Software: developed a system for “unstructured” data
Audio files Images Web video content Documents (ex. Word or Excel)
Trend towards ‘diskless’ databases (much faster; will benefit tremendously from 64-bit computing)
2. Competitors Biggest threat is small players offering
innovative improvements on current products New entrants into market Oracle’s solution: Buy them…
Oracle’s Innovation Strategy
Project Fusion
Offering open source software (i.e. Linux)
Buy out competitionReaching out to different markets
Oracle’s Shopping Spree
December 2004: PeopleSoft- ERP ($10.0B) March 2005: Oblix- Identity Management (undisclosed amt) April 2005: Retek- Retail software ($670M) June 2005: Triple-Hop- Context search July 2005: Context Media- Content Integration
ProfitLogic- Demand analysis August 2005: i-flex- 41% share Indian banking software September 2005: Siebel Systems- CRM ($5.85B) October 2005: Innobase- Storage engine November 2005: Thor Tech & OctetString- Identity Management January 2006: 360Commerce February 2006: SleepyCat- Open-source April 2006: Portal Software- Billing software (£225M)/($450M)
Sources http://www.oracle.com/corporate/press/2004_dec/acquisition.html http://www.sap.com/company/pdf/BWP_AR_Greenbaum.pdf http://www.theregister.co.uk/2003/11/11/oracle_chokes_on_peoplesofts_poi
son/ http://www.zpub.com/un/un-le.html http://money.cnn.com/2004/12/13/technology/oracle_peoplesoft/ http://en.wikipedia.org/wiki/Oracle_Corporation http://en.wikipedia.org/wiki/Peoplesoft http://www.fool.com/News/mft/2005/mft05031820.htm http://www.eweek.com/category2/0,1874,1743371,00.asp http://www.eweek.com/category2/0,1738,1780193,00.asp http://www.eweek.com/article2/0,1895,1752305,00.asp http://www.informit.com/articles/article.asp?p=458692&seqNum=1 http://www.line56.com/articles/default.asp?NewsID=6431 http://www.line56.com/articles/default.asp?NewsID=6454 http://www.dmreview.com/article_sub.cfm?articleId=1009161