News

PeopleSoft and IBM strike long-term development deal

• By John K. Waters
• September 22, 2004

PeopleSoft and IBM have struck a deal they are calling “the most significant enterprise application alliance in the companies’ history.”

Under the terms of the agreement, PeopleSoft will integrate IBM middleware and development tools -- including components of WebSphere Portal, WebSphere Business Integration, WebSphere Application Server and WebSphere Studio Application Developer -- with its portfolio of applications. PeopleSoft will make the WebSphere products available to its customers at no additional charge.

The two companies also intend to invest $1 billion dollars in a five-year, joint development effort to create industry-specific software based on the WebSphere line. To smooth the progress of that development, PeopleSoft and IBM will swap development teams to work in each other’s facilities.

“This is a very important strategic investment from IBM’s perspective,” Steve Mills, SVP of IBM’s software group, tells reporters. PeopleSoft CEO Craig Conway calls the deal “the most ambitious, aggressive announcement ever from PeopleSoft, and maybe the most ambitious announcement in the history of the enterprise application software industry.”

The two companies announced the agreement at PeopleSoft’s annual user conference, PeopleSoft Connect 2004, underway this week in San Francisco. During his conference-opening keynote, Conway joked about Oracle’s much-publicized $7.7 billion hostile takeover bid, which he characterized as a distraction from his company’s accomplishments during the past year.

“Have you ever had a bad dream that just wouldn’t seem to end?’’ Conway said, prompting laughter from a packed auditorium in San Francisco’s Moscone Center. “Well, we have. And ours has been going on for 15 months.”

During his speech, Conway talked about those accomplishments, which include the acquisition of smaller competitor J.D. Edwards, numerous product updates and the release of a new product, the Sarbanes-Oxley compliance product known as The Enforcer.

The acquisition of J.D. Edwards brings additional vertical industry expertise to the company, Conway says, as well as expertise in selling to the mid-market and most important, the potential for developing “the strongest integrated manufacturing product in the world.”

In the past 12 months, 140 enhancements and 110 regulatory updates have been added to PeopleSoft World, and 300 enhancements have been added to PeopleSoft EnterpriseOne, including support for RFID technology, Conway says. An additional 250 enhancements are planned for EnterpriseOne by the end of the year, he notes.

During his keynote, Conway also spoke of his company’s evolving Service-Oriented Architecture (SOA) strategy. What he calls the “adaptive software generation” is now assembling business processes from different components, which means applications now must be Web services-enabled.

PeopleSoft came late to SOA. Frank Scavo, managing partner of Strativa, an Irvine, Calif.-based biz-tech analyst firm, who attended a post-keynote press conference, echoed the sentiments of many analysts attending the show. “It’s probably a couple of years late,” Scavo says. “Most of the major enterprise vendors have been working on a Service-Oriented Architecture for at least a year. But it’s the right direction and I’m glad to see they’ve finally gotten there.”

On PeopleSoft’s decision to partner with IBM, the firm’s Conway says: “To do SOA, you need this extremely strong layer of middleware infrastructure. Our strength is in delivering the most flexible and adaptable applications. Our expertise is in knowing the business processes, the assembly and structures for customers to put together these collaborative applications. Our expertise is not in this layer of middleware. IBM is the leader in this middleware infrastructure, the products, tools and services to help companies actually take these flexible and adaptable applications and connect them together. That’s the basis of our announcement.”

This year’s PeopleSoft Connect conference was a sprawling affair, taking up all three wings of the Moscone Center and boasting some 15,000 attendees. From the opening multimedia light show and dance/gymnastics performance, to the Treasure Island blowout bash on the last night of the conference, the event was choreographed to reassure investors and customers that PeopleSoft is still in control of its own destiny.