There are many aspects to the PeopleSoft-IBM strategic alliance but one thing it does show is that PeopleSoft is still determined to get on with its business and is a long way from capitulating. Furthermore, while it makes no difference to the Oracle bid status, the backing of a company of the stature of IBM will help calm any frayed nerves…
Although the alliance is significant, it is more of a case of solidifying and deepening an existing relationship than breaking any new ground. As Crosbie Burns, PeopleSoft managing director for UK and Ireland points out, PeopleSoft is already one of IBM’s top global partners. Having made the decision not to get involved with developing its own middleware, PeopleSoft already supports IBM’s complete technology stack along with BEA Systems’ middleware because it maintains it wants to give customers as much choice as possible.
IBM also had a deep relationship with JD Edwards prior to PeopleSoft’s acquisition with IBM WebSphere forming an integral part of JD Edwards XPI integration platform. The joint PeopleSoft/JD Edwards entity is also important to IBM’s iSeries business unit because it represents several thousand iSeries-based World users.
Mr Burns denies that the agreement has anything to do with the Oracle situation and is focused around the positives of the relationship with IBM. But it cannot be denied that it will antagonize Oracle CEO Larry Ellison even though it is unlikely to cause him to change his mind about his pursuit of PeopleSoft. Oracle competes directly with IBM in the database field and as it also offers its own middleware it would not relish a contract where it had to ship the WebSphere application server platform.
It is not likely to be the first move in an IBM rescue bid because that would destroy IBM’s partner-based applications strategy and alienate large numbers of existing partners with a direct impact on software infrastructure sales. Also this is not the first relationship of this type IBM has entered into – it has similarly extensive relationships with both SAP and Siebel Systems.
For PeopleSoft the agreement is a vote of confidence by IBM and a demonstration that it is still operating strategically and has a future, which it hopes will encourage wary prospects who have held off on buying decisions to make the deal. The company is reported as saying it has lost at least $1 billion in sales due to uncertainty.
As far as some customers are concerned the agreement will provide some assurance that their investment would be safe even if Oracle was successful by linking the application with a market leading company and its open systems infrastructure software. As Mr Burns said, What is key is the openness of the approach around the middleware platform.
There are some less appealing aspects of the agreement however. The deal calls for IBM’s software to be embedded within the PeopleSoft application. However PeopleSoft already has an agreement with BEA Systems whereby its middleware is embedded within PeopleSoft. The switch to IBM could alienate already worried customers who are using the BEA middleware. Mr Burns said there were no plans to offer dual versions of the software and that the embedded BEA software would gradually be replaced. He said existing customers who have invested in PeopleSoft running on the BEA platform would have their investment protected and supported but there are no details as yet.
The company appears to have a very selective definition of what constitutes customer choice. IBM software will be embedded but it will not restrict customer choice, said Mr Burns explaining that the IBM software maintains choice because it is based on open standards. There is more choice because it is not proprietary compared to Oracle and SAP, he went on. SAP and Oracle deliver proprietary middleware. We don’t want a situation where we lock customers into that.