News

Oracle pledges no changes in PeopleSoft support; touts next-generation app architecture

• By Rick Saia
• January 19, 2005

Oracle this week unwrapped its organizational strategy following this month’s acquisition of PeopleSoft, promising customers of both companies that they shouldn’t notice any changes in product support.

"We’re going to continue to develop all three product lines," including software from J.D. Edwards, which PeopleSoft bought in 2003, until 2013, Oracle CEO Larry Ellison announced at the outset of a three-hour-long event at Oracle headquarters in Redwood Shores, Calif., to describe the company’s post-acquisition product and support strategies.

Ellison said his company also plans to enhance those products.

"Continuity is extremely important," he said, so "we’re going to preserve your investment" in the respective products, he told users of all three companies’ software.

For example, Oracle will complete work on PeopleSoft 8.9 later this year, then develop Version 9.0, which will be released in 2006, Ellison announced. Oracle will also finish development and deployment of J.D. Edwards 8.11, and then plans to use Oracle technology to develop Version 8.12 and release it in 2006, the CEO said.

Yet in the meantime, Oracle will forge ahead with a plan to combine new products under the Oracle banner. An applications strategy team will spearhead that effort. The team, which company officials say will consist of "hundreds" of employees, will look at releases and propose successor products that can be easily migrated into customers’ IT architectures, said John Wookey, Oracle’s senior vice president for application development. "We want to make sure we carry our customer bases forward as part of this process."

The launch comes just days after Oracle announced the layoffs of about 5,000 workers. However, the company stressed that it plans to keep more than 90 percent of PeopleSoft’s product development and support staff.

"We have been very careful to retain the engineering talent from J.D. Edwards and PeopleSoft" to enhance the product lines, and will keep the engineering staffs from the two former companies separate from Oracle developers and those who will be developing new products, Ellison noted.

Ellison also announced "Project Fusion," Oracle's next-generation information-oriented application architecture that will combine the best features and functions of Oracle's applications with those of PeopleSoft and JD Edwards.

"Project Fusion" is based on industry standards that will be modularized for flexible deployment, optimal performance and easy maintenance, the company said in a statement. New information-driven applications will incorporate key strengths of all product lines and focus on business process automation, industry-specific capabilities, real-time information access and reporting, and superior usability.

"The new architecture and the results companies will achieve will be truly revolutionary, but the path to the new successor product line will be evolutionary," Wookey said.

Oracle says the first Project Fusion components, specifically data hubs and transaction bases, are scheduled to be released beginning in 2006. Initial applications will come out in 2007, followed by application suites the year after.

AMR Research, a Boston-based IT analyst firm, said in a statement that while Project Fusion became the centerpiece at the Oracle event, the complete vision appears to be at least three and a half years away.  "Despite the long lead time, it may be exactly what customers want to hear as they plan their migration to a service-oriented architecture (SOA)," AMR said.

"While we believe the launch was very positive for customers, we didn’t hear any discussions of the role that Project Fusion will play in driving down the costs of managing next-generation architectures," AMR said.  "The real winner will not be the first to deliver on SOA.  Instead, it will be the first to deliver on a new [application infrastructure] that makes it easy to install and upgrade enterprise software." 

Oracle said it will address the financial implications of the PeopleSoft deal next week. However, AMR estimates that the two companies took in $5.5 billion in revenue last year from its applications. AMR said that makes the new organization the second largest applications vendor with an estimated 12 percent share of the worldwide enterprise applications market behind SAP (18 percent).

"Oracle's acquisition of PeopleSoft makes the combined entity a much more formidable competitor to SAP in the faster growing sub-segments of the enterprise applications market, including customer relationship management, supply chain planning, and human capital management," Bruce Richardson, AMR’s senior vice president of research, said in a statement. "Whether Oracle can continue to cut into SAP's share will depend entirely on the successful integration of the two companies."

However, Oracle, in spite of efforts by other vendors to woo PeopleSoft customers, made an all-out pitch to keep them. "We’re externally focused and ready for business," Oracle President Charles Phillips said.