The company has set itself some very public and potentially tough deadlines to meet, with the result that there will be no let-up in the daily scrutiny it has undergone since June when it announced plans for a friendly takeover of JD Edwards.
One of the biggest areas of scrutiny concerns its plans for the three product lines that now comprise its portfolio: the PeopleSoft-based Enterprise line, JD Edwards-based Enterprise One line, and JD Edwards’ iSeries-based World line.
The company is adamant that it will retain all three lines, and has the resources to fully support and develop them; it sees the acquisition as expansion not consolidation.
PeopleSoft believes that as an industry matures, the issue becomes one of portfolio management and integration rather than a single product focus with customers requiring the variety that suits their needs but without crippling integration costs.
But the question remains – how long they will be retained as separate code bases given the ongoing costs of supporting three lines and plans for intellectual property exchange and common components across the lines?
However, this is not a risk factor for the short or medium term as consolidation would totally undermine one of the key reasons for the acquisition from PeopleSoft’s perspective, which was to gain a surer foot in the mid-market where its high-end enterprise applications have failed to secure a base, but which is the home ground of the JD Edwards products.
The mid-market has become increasingly important to enterprise business application providers because its untapped potential provides vendors with fresh sales opportunities, but it is doubly important for PeopleSoft because it represents a fresh way for it to tackle Europe, which has been slow to respond to PeopleSoft’s charms.
PeopleSoft anticipates that 80% of its European business will be with sub-$500 million revenue companies. The company is actively factoring the effects of the expansion of the EU and developments in Eastern European into its business growth plans.
The anticipated expansion of the EC will provide the company with additional opportunities and it plans to take advantage of the opening up of the EC by establishing a direct presence in many of the EC member countries. Those EC and eastern European countries it cannot reach directly, it will access via partners. Its ambition is to be number one or two in the every country where it operates directly.
The JD Edwards product set will be essential in this expansion strategy as their single database architecture sits well with the business makeup of many of the prospective new EC members and eastern European countries which are predominantly SME-based and poor in terms of IT resources and infrastructure compared to European states like France, Germany and the UK.
PeopleSoft’s widely announced plans to fill the gaps in the respective products by transferring intellectual capital from one to another is based on a two stage process.
The next three months represents the first stage, in which PeopleSoft said it will deliver best of breed-style application integration to fill functionality gaps with PeopleSoft-developed out of the box integration capabilities.
Stage two involves rewriting applications from one application stack for another, so that they can run natively. The company has still to work out the timeline for this crucial stage, but observers will be alert to activity in this area as it will be an important indicator of how well PeopleSoft is handling the integration of JD Edwards and to what extent it will add value to the business as a whole.
Its commitment to all three code bases and increasing support for Linux for example, show omissions from its strategy. Notably it has not committed to supporting Microsoft [MSFT] SQL Server, nor the .NET platform in anything other than a generalized way, which is significant because they add complex dynamics to the situation and PeopleSoft’s ability to drive value from the acquisition in respect of its mid-market focus.
This article was based on material originally published by ComputerWire.
