Detailed execution plans have yet to be released, but clearly Oracle is seeking to reassure existing PeopleSoft partners in the PeopleSoft Connect channel program.
Oracle observers are also looking at maintenance fees, with the expectation that the PeopleSoft customer base could be asked to accept a 2% rise in average maintenance fees to bring PeopleSoft fees in line with the Oracle level, which runs at around 22%. If it happens, this would be the second rise in maintenance fee levels for the JD Edwards customer segment which faced a rise following PeopleSoft’s acquisition of the mid-market vendor, albeit accompanied by increased service levels.
The issue of maintenance fees requires sensitive handling by Oracle if it is to retain the customer base that was the principle reason for pursuing PeopleSoft. Its challenge is to balance the need to retain the existing PeopleSoft/JD Edwards $1 billion maintenance stream against the advantages of reconciling the two fee levels, while simultaneously addressing external demands to show demonstrable value from the $10.3 billion investment.
The pressure on Oracle as far as maintenance is concerned intensified recently when SAP announced its migration program for PeopleSoft and JD Edwards users. Unlike most migration programs, SAP is offering to take responsibility for maintenance of the existing competitor implementation while users make the transition to SAP alternatives. This approach gives customers an attractive lower risk non-Oracle future option if required, because it combines lower cost maintenance, across all three installed systems – SAP, PeopleSoft, and JD Edwards – and without the risk of using a third-party provider. An added pressure for Oracle is that SAP’s standard maintenance fee comes in at 17%, rising by either 2% or 4% if customers want extended service on older products.
