All Eyes Turn to PeopleSoft 8 CRM

Just two years ago PeopleSoft was dismissed as "struggling" or "lost." But it has charged back with PeopleSoft 8 CRM, a Web-architected enterprise solution featuring a new CRM component. And the competition is getting more than a little nervous. How nervous? Let's just say that the war rooms across Silcon Valley are open 24/7.

"[PS 8 CRM] is going to place PeopleSoft squarely in the midst of the CRM battle," says Joanie Rufo, service director for customer management strategies at AMR Research in Boston. "It's going to be an interesting 12 to 18 months."

What has made PeopleSoft's new release so intimidating is the architecture of its PS 8 CRM platform, which supports the components of the company's enterprise suite, including HR, financials, supply chain and, most recently, CRM. It features a "pure Internet" design, which means users access these applications through an Internet browser, rather than through Windows.

More importantly, though, PeopleSoft specifically built the architecture of PS 8 CRM to integrate with other applications, even those from competing vendors. It embedded XML "messages" into the system, which allow PS 8 applications to work seamlessly with either legacy or new applications.

According to Forrester analyst Laurie M. Orlov, this open architecture design not only addresses ever-present integration issues, it gives PeopleSoft a strategic leg up as well. In a recent Forrester brief, Orlov writes, "Alert to the multivendor real world, PeopleSoft has grouped its new software into bundles that Integrate with SAP and Oracle...As with their HR products in the past, this will give them a foothold in the competitors' installed bases."

PS 8 CRM is the final major component of the company's enterprise solution, and the culmination of a strategy that began almost two years ago with PeopleSoft's acquisition of then down-and-out CRM vendor Vantive. In a year-long effort that CEO Craig Conway calls "Operation Leapfrog" ("PeopleSoft would leapfrog every competitor," he explains), 100 software engineers redesigned Vantive's CRM applications for the PS 8 CRM platform.

These engineers also embedded considerable business analytics functionality into these applications, as well as in the other PS 8 back-office components. According to Stan Swete, PeopleSoft's general manager for CRM, analytics acts as the glue that binds all of the PS 8 CRM components into one enterprise system. "Analytics takes information from the CRM products, but also from other parts of the enterprise. We've created a system that brings meaningful data from everywhere it exists--the supply chain, financials, CRM and human resources--and delivers it everywhere it is needed."

Facing The Enemy
While open architecture and advanced integration capacity definitely make PS 8 CRM competitive in the CRM/enterprise solutions market, PeopleSoft currently faces numerous obstacles on the path to market domination. First, it must convince Vantive's 982 customers that upgrading to the new Internet-based system is a smart move, a task which, according to Conway, is job one. "Software companies go for the low-hanging fruit," he says. "For PeopleSoft, that low-hanging fruit is Vantive customers."

This job will be complicated by the company's new pricing model, which is value-based, rather than user-based. In the future, PeopleSoft will price its solutions based on customer revenues, rather than on the number of users. While this nonstandard model may someday become more common, the initial transition--particularly with current customers accustomed to the old pricing scheme--may prove choppy.

Secondly, competition is tough. Both Oracle and SAP are charging ahead with enterprise solutions that feature CRM applications. Like PeopleSoft, both of these companies began as ERP vendors, and slowly, painfully, used CRM applications to reinvent themselves as formidable enterprise software players. While industry watchers will gleefully catalogue Oracle's problems in bringing its Oracle 11i enterprise solution to market, the software giant is nevertheless capturing significant CRM market share in a matter of months. As for SAP, many expect the German software giant to dominate many corners of the enterprise market. AMR Research predicts that in 2002, SAP will be the number two CRM vendor, behind Siebel Systems.

Specific to CRM, PeopleSoft will find its toughest competition in Siebel Systems. According to AMR's Rufo, the two companies have different strengths. "Siebel may still be ahead in functionality, but PeopleSoft's architecture is superior," she says. "There's no question that PeopleSoft has the basic CRM in place. They have sales, marketing and service. With the customer-facing piece, especially on the sales side, and in the post-customer areas, they will be in good shape. But," she adds, "They don't have any guided selling right now, and they don't get into channel management. I don't know if they are ready to go head-to-head with functionality against Siebel."

But, Rufo says, PS 8 CRM in its current design gives a company that was struggling just two years ago the boost it needs to compete--and to make its competitors nervous. "PeopleSoft has done a really good job in terms of developing it," she says. "They have accomplished a lot in a short amount of time."

CRM Covers
for qualified subscribers
Subscribe Now Current Issue Past Issues
Buyer's Guide Companies Mentioned