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