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PeopleSoft, JDE customers leery of Oracle support

As Oracle seals a $10.3 billion deal with PeopleSoft, customers are clamoring over future support of their business software.

Now that Oracle Corp's takeover bid for PeopleSoft Inc. is a done deal, J.D. Edwards customers better pay even closer attention to what the software giant says and does in the next several months -- or risk losing their shirts.

There's massive concern over what's going on.
Don Abens
presidentCentral Texas J.D. Edwards User Group

Users may even want to consider abandoning their support contracts and fleeing to another vendor, according to at least one analyst.

Just days after PeopleSoft announced it would buy JDE in June 2003, Oracle swooped in and announced a takeover bid for PeopleSoft. Oracle's struggle to gain control of PeopleSoft drew to a close Monday when PeopleSoft's board agreed to a new $10.3 billion takeover offer, making Oracle the second largest applications vendor in the world.

It's been a two-year roller-coaster ride for JDE customers, but it's far from over. In fact, observers say the real upheaval hasn't even begun.

"There's massive concern over what's going on," said Don Abens, president of the Central Texas J.D. Edwards User Group. "It took months to find out what PeopleSoft would do, and obviously the fears are a little stronger now since Oracle is much larger and has not shown any interest in maintaining the previous product lines."

Analysts said Oracle executives need to sharpen their message over whether the company will support both the PeopleSoft and JDE products or risk losing those customers to SAP AG and other enterprise resource planning vendors.

"This may be an opportunity for them to move to another ERP system depending on the costs and risks, but it's a very unnerving situation to be in," said Michael Dominy, a senior analyst with Boston-based Yankee Group. "There better be a very compelling, cohesive clear plan that lays out how all different types of customers within the PeopleSoft customer base will be supported."

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But Oracle has pledged support for PeopleSoft all along. CEO Larry Ellison reiterated that promise during Oracle's OpenWorld user conference last week in San Francisco, noting that Oracle would roll out the next planned versions of the PeopleSoft's Enterprise One and World applications suites. The company also said it would enhance the current version of JDE software, Enterprise One 5.0, and continue development on the 6.0 version.

While thousands of PeopleSoft employees face layoffs, Oracle president Charles Phillips has said PeopleSoft developers would also be retained to help build a new product.

Still, Oracle has said little about how long it will support the JDE software, and Dominy said he wouldn't be surprised if within a year Oracle sells off the JDE product to a third-party ERP vendor. JDE software runs on IBM infrastructure, and companies will likely be unwilling to make a costly migration to Oracle, he said.

"They can't force these customers onto an Oracle platform because they will drive them either out of maintenance agreements or to a competitor that runs on IBM infrastructure," Dominy said.

While companies may not immediately flee from Oracle, some former JDE customers may take the opportunity to consider a third-party support and maintenance vendor, said Bill Swanton, vice president for research at Boston-based AMR Research Inc.

"At this point, given the stronger statements from Oracle, I would take a wait and see attitude," Swanton said. "Oracle has a lot to prove to create value for these people and it's still too soon to tell if Oracle will deliver."

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