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Oracle vs. PeopleSoft

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

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Oracle vs. PeopleSoft

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  1. Oracle vs. PeopleSoft Ryan Martin Sean Ogle Tiare Packard 5/16/06

  2. Overview • Who are Oracle and PeopleSoft? • What is ERP? • Why did Oracle acquire PeopleSoft? • What has happened since the acquisition?

  3. Oracle • Founded in 1977 • Larry Ellison is CEO • One of largest developers of “Database Management Systems”

  4. PeopleSoft • Founded in 1987 by David Duffield • Provides software to thousands of large companies and governments • Specializes in ERP solutions

  5. 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

  6. 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

  7. Oracle Needs PeopleSoft! • Oracle’s need for ERP leads it to wanting to acquire PeopleSoft • Lack of options • PeopleSoft does not want to be bought • Becomes tactical fight

  8. PeopleSoft’s Reaction • Buys JD Edwards - Friendly merger • $1.7B • Becomes bigger and more expensive to acquire

  9. PeopleSoft’s Reaction Cont’d. • Poison pill • Reduced support = 2x to 5x fees for purchase • Stock trick = dilute stock to take away ownership • Power shift towards directors rather then shareholders

  10. Oracle’s Reaction • Insists and raises bid - Hostile takeover • Original bid $16/share • June 03- 2 weeks later $19.50/share • Feb 04- Raise 33% to 9.4B or $26/share

  11. DOJ Gets Involved • Feb 2004 Department of Justice: Anti-trust • SAP 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."

  12. After DOJ Rejects • May 04- Lower to $7.7B or $21/share • Nov 04- $9.4B or $24/share • Dec 04- Final bid @ $10.3B or $26.50/share • PeopleSoft accepts @ 100% above original bid

  13. Oracle’s Concerns • Largest merger in software industry history • Concerns over keeping PeopleSoft’s culture and employees • Founder David Duffield had “Kill Oracle” pep rally

  14. Results of the Oracle|PeopleSoft Merger • January 2005: Oracle laid off nearly 50% of PeopleSoft’s 11,000 employees • 90% 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

  15. 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

  16. 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)

  17. 2. Competitors • Biggest threat is small players offering innovative improvements on current products • New entrants into market • Oracle’s solution: Buy them…

  18. Oracle’s Innovation Strategy • Project Fusion • Offering open source software (i.e. Linux) • Buy out competition • Reaching out to different markets

  19. 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: PortalSoftware- Billing software (£225M)/($450M)

  20. 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_poison/ • 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

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