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Oracle and PeopleSoft—The CRM Angle

CRM competitors could target potentially disaffected customers—particularly if Oracle is less than sincere about servicing them

• By Stephen Swoyer
• February 2, 2005

Oracle Corp. officially capped its acquisition of the former PeopleSoft Corp. last month. While users of enterprise application software from PeopleSoft, Oracle, and the former J.D. Edwards Co. will be most directly impacted by Oracle’s plans, CRM customers (and many CRM software vendors) should also expect to feel aftershocks.

For starters, the combined Oracle-PeopleSoft is better positioned to challenge front-runners SAP AG and Siebel Systems Inc. in the CRM market. What’s more, the addition of PeopleSoft’s CRM assets leaves Oracle well positioned to flesh out its own industry-specific CRM offerings.

At the same time, analysts say, there’s ample opportunity for CRM competitors to target potentially disaffected customers—particularly if Oracle is less than sincere about servicing them.

To recap, last month Oracle announced Fusion, a new Java-based, service-oriented architecture that—when delivered in 2008—will consolidate the Oracle, PeopleSoft, and J.D. Edwards code bases. The database giant also pledged to support existing Oracle, PeopleSoft, and J.D. Edwards customers until 2013, and, crucially, claimed that Oracle would not discriminate against customers on the basis of their database investments until that year. For users of IBM’s DB2 and Microsoft’s SQL Server databases, this was good news.

That was the net-net of the Oracle press event itself, says Ian Jacobs, principal CRM analyst with consultancy Current Analysis Inc.: It wasn’t nearly as bad as most folks expected. In fact, Jacobs notes, tales of Oracle’s PeopleSoft housecleaning turned out, in the end, to have been greatly exaggerated.

“[W]hat Oracle plans to do could be seen as a major move precisely because its plans are not particularly revolutionary,” he writes, noting Oracle’s pledge to maintain and upgrade the PeopleSoft and J.D. Edwards lines through 2013.

Of course, Jacobs stresses, Oracle still has its work cut out for it. “PeopleSoft customers have had reservations about Oracle because they saw PeopleSoft as a ‘different kind’ of company,” he says. Similarly, PeopleSoft and J.D. Edwards customers have already been targeted by migration offers from vendors such as SAP, Lawson, and Microsoft.”

For PeopleSoft CRM customers, however, Oracle officials had good news: They expect to hew to PeopleSoft’s original release schedule, which—assuming there aren’t any show-stopping roadblocks—should produce a new PeopleSoft CRM 8.95 release by the fourth quarter of this year.

More importantly, the addition of PeopleSoft’s CRM practice gives Oracle a real opportunity to broaden the reach of its industry-specific CRM solutions, Jacobs says. “In the same way that PeopleSoft was known for human resources applications in the back office realm, [Oracle’s] CRM strength was always seen in the service [and] support arena,” he writes. “Oracle should be taking copious notes on how PeopleSoft has incorporated analytics into its customer service product to create opportunities for upselling. Oracle should then make similar technology a priority for its CRM developers.”

Oracle’s takeover of PeopleSoft was propounded largely on the basis of the latter’s strength in enterprise applications, not CRM. For this reason, Jacobs speculates, the combined "OracleSoft" could be vulnerable to aggressive marketing from without, especially if Siebel, SAP, salesforce.com and other CRM vendors introduce special migration programs designed to get disaffected customers up and running on their own solutions. This wouldn’t exactly be unprecedented, either, he notes: SAP recently purchased TomorrowNow, a Texas-based company that specialized in supporting PeopleSoft’s enterprise applications stack, for this very reason.

“Although the chances of wholesale success from such a program are slim, they are higher in the CRM realm than in the back office,” he says. “This is especially true in the midmarket, an area that PeopleSoft had really only begun to exploit, but one where it did win over some customers.”

In the same way, Jacobs indicates, CRM-as-a-service providers like salesforce.com and NetSuite have much to gain if Oracle doesn’t keep PeopleSoft’s CRM customers happy. “Switching to a hosted CRM service should, in theory, be a less expensive alternative than tossing out one enterprise application for another,” he notes.