PeopleSoft's New Partnerships and Products

To the crowd gathered at PeopleSoft's 2004 Leadership Summit in Las Vegas this week, the pending arrival of Enterprise CRM 8.9 comes as just one of several major announcements, many of which--including a compliance tool and reductions in total cost of ownership--were geared to appeal to the high-level business executives in attendance. Still, much of the news trumpeted at the conference has far-reaching implications for CRM specialists and enterprise application users overall. PeopleSoft executives crowed over first-year results from the company's "Total Ownership Experience" initiative, introduced at last year's Summit. Ram Gupta, executive vice president for products and technology, says that PeopleSoft "is already halfway to the original goal of a sixty percent reduction" in the cost of implementing, maintaining, and using the PeopleSoft suite of applications. On the sales side PeopleSoft announced a new partnership with IBM to resell PeopleSoft products, including its CRM offerings, to the small and midsize business market worldwide. According to George Ahn, PeopleSoft's group vice president and general manager of Enterprise CRM, company policy makes it impossible to break out what percentage of licensing revenue stems directly from CRM. He was, therefore, unable to say what immediate impact on revenue the IBM deal would have in that segment. Another theme at the conference was the aftermath of the J.D. Edwards acquisition, which Craig Conway, PeopleSoft president and CEO, revealed for the first time originally was to be announced at last year's Summit in May, but which was delayed until early June. Although one PeopleSoft executive asserted that the integration of the product lines of J.D. Edwards and PeopleSoft has been completed, Conway told analysts that "the real value of the J.D. Edwards deal has yet to be realized." One of the fruits of the acquisition is a new solution introduced to address what the company calls demand-driven manufacturing. In that arena, according to Les Wyatt, PeopleSoft's vice president and general manager for the EnterpriseOne suite, "there's been a fundamental shift of power to the customer." Conway also said that the addition of J.D. Edwards, which "offered us products we didn't have," more than doubled PeopleSoft's customer base and allowed the company to expand its focus to small and midsize businesses. He smiled as he told the crowd, "We always coveted the midmarket. Why? Because we want to sell more software. Today there is an imperative for midmarket companies to buy enterprise application software." Conway also acknowledged that there have been pricing pressures in the marketplace, citing the "discounting environment" brought on by cutthroat competition. "It has been brutal. No question about it," he said, adding: "I don't think prices are ever going to go back up, but [they're] not going down any farther." In terms of competition, he told analysts, "we fight to the point of pain," but sometimes have to walk away from a deal. Seemingly in contrast to the old baseball adage, "Hit 'em where they ain't," Conway said the goal for PeopleSoft would continue to be to introduce product lines to target where its rivals are most formidable. As a general rule, he said, "you try to penetrate the part of the marketplace where your competitor has been the strongest." It was that mentality, he said, that led PeopleSoft to acquire CRM vendor Vantive in 1999, and to further develop its CRM offerings. See Related Story: PeopleSoft Announces Enterprise CRM 8.9 http://www.destinationcrm.com/articles/default.asp?ArticleID=4133