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By Derek Brown, Adam Nasset, & Kelly Phelps

Outline of Presentation Brief history of Oracle, PeopleSoft, and SAP

What are ERP Systems and what role do the companies play in this field

Why Oracle needed PeopleSoft

Strategies used to acquire PeopleSoft and to appeal to PeopleSoft users

Current state of the Oracle\PeopleSoft acquisition

Timeline of the PeopleSoft acquisition and other companies and technologies that Oracle has purchased or acquired

Group Discussion Questions

Who is Oracle? Oracle, founded in 1977 is one of the major

companies developing database management systems, tools for database development, and enterprise resource planning software in the world.

The CEO for Oracle over the past several years has been Larry J. Ellison.

Since this acquisition of PeopleSoft, Oracle has made a lot of other attempts to build up their ERP and core technologies

Who is PeopleSoft? PeopleSoft, Inc. was a software company that provided enterprise

resource planning, human resource management and customer relationship management software solutions to large corporations worldwide.

PeopleSoft was founded in Pleasanton, California, in 1987 by Dave

Duffield and Ken Morris.

PeopleSoft is easily customized to fit the specific business needs of each client, while still remaining generic enough to meet corporate and governmental tracking requirements.

In 2003, PeopleSoft merged with smaller rival J.D. Edwards

software.

Who is SAP?

SAP is the leading ERP software producer

SAP’s main product SAP R/3

More than 28,000 companies worldwide use their products

What are Enterprise Resource Planning Systems?

Enterprise resource planning systems (ERPs) are management information systems that integrate and automate many of the business practices associated with the operations or production aspects of a company.

ERP software can aid in the control of many business activities like: sales, delivery, billing, production, inventory management, and human resources management.

ERPs are cross-functional and enterprise wide.

To use ERP systems, companies often seek the help of an ERP vendor or of third-party consulting companies.

Most ERP vendors allow changing their software to suit the business needs of their customer.

Advantages of ERP SystemsThe benefits from enterprise resource planning are claimed to include:

The ability for macro-level decision making by having access to consolidated data/information Transparency across entire organization Integration of all standard business processes (human resources, financials, operation) Lower inventory carrying costs, ordering costs and production costs. Lower accounting and record keeping costs Lower investment in equipment Lower investment in plant Increased process transparency for the customer Flexibility for greater product customization, resulting in a better match to the exact needs

of the customer Potential for increased sales volume, increased sales revenue (due to a higher effective price, ie.

- no discounts), increased market share, and increased profitability due to customer satisfaction improvements

Potential for increased profitability or increased market share (at a lower price) due to cost and efficiency improvements

Disadvantages of ERP SystemsThe disadvantages of the enterprise resource planning are claimed to be: the systems can be very expensive to install and maintain ERPs are often seen as too rigid, and difficult to adapt to the specific Workflow and Business

process of some companies--this is cited as one of the main causes of their failure. some systems can be difficult to use the system is no better than the weakest link in the chain

If the ERP system is integrated with a supply chain management system, other potential problems include:

the system is vulnerable to a strike or labor problem at any one link in the chain there can be transportation inefficiencies if small lots of product are transported several times

before reaching the consumer/user once a system is established, switching cost are very high for any one of the partners (reduced

flexibility and strategic control at the corporate level) there is a resistance to sharing sensitive internal information, information that may be

essential to the process there are compatibility problems with the various legacy systems of all the partners

Oracle’s\PeopleSoft’s role in ERP Systems

PeopleSoft was an ERP vendor and provided consulting for their products.

Oracle also provided some ERP uses for many companies and with the acquisition of PeopleSoft they greatly increased their influence in that market.

Oracle’s database software is the backbone of many ERP systems.

PeopleSoft Products The whole software suite of PeopleSoft has changed from the client-

server based design to web-centric design, called PeopleSoft Internet Architecture (PIA).

The architecture is built around PeopleSoft’s own PeopleTools technology.

The benefit of creating their own development platform allowed PeopleSoft applications to run under many different operating systems and database platforms.

PeopleSoft’s products are modularized into specific components.

What was CEO Larry J. Ellison’s thought process behind this conflict of interest?

Before this conflict between Oracle and PeopleSoft, CEO Larry J. Ellison envisioned Oracle to do for corporate software what Microsoft had done for PC software.

Ellison felt extremely threatened by Microsoft in the database field and wanted to expand into the growing ERP field

PeopleSoft acquisition was an attempt to be able to compete with Germany’s SAP.

PeopleSoft had just passed up Oracle as the second largest business software producer

Easing PeopleSoft users’ fear of takeover

PeopleSoft had roughly 11,000 customers in 150 countries which generated approximately $3 billion in revenue

PeopleSoft customers very resistive to Oracle takeover early on

PeopleSoft ran ads and had rallies against Oracle

Oracle launched ad campaign and on Jan 18th “Project Fusion”

What is Project Fusion? Oracle offered full support of PeopleSoft’s three

product lines through at least 2013 Oracle E_Business suite, PeopleSoft Enterprise,

and EnterpriseOne Offered full product support that included:

patches and fixes, upgrading scripts, tax and regulatory updates, and tech support

Oracle promised to maintain rival database technologies (i.e. DB2, SQL Server)

What is Project Fusion?

90% of PeopleSoft Tech staff to be retained 8,000 developers to support Project Fusion Project Fusion applications will be available

sometime in 2007 Long-term goal: Construct a combined

“Super Suite” of these products

Other customer retaining techniques

In July, 2004 Oracle issued companies first ever set of sales guidelines

Oracle’s sales force had a reputation for being tough, arrogant, and every aggressive

One industry expert said, “Oracle Partner” was an oxymoron

Guidelines: Identify (know name) and work with partners and respect each partners “position and value add”

What is current status of conflict?

One month ago, Oracle released Enterprise FMS 8.9 as promised in “Project Fusion”

9.0 is scheduled to be out next year 5,000 or roughly 41% of all PeopleSoft

employees have been laid off Oracle seems to be living up to their

“Project Fusion” guidelines but push has begun toward their products

What is current status of conflict?

Project Fusion has helped relieve some customer fear regarding PeopleSoft software

The success of Oracle’s long-term Business Solution software applications remains a question

Oracle’s #2 status in the ERP market may well hinge on the success of their “Super Suites”

May 31, 2005 was the end of Oracle’s fiscal year. Revenue was $11.8 billion, up 16.1% over 2004

Timeline of the Takeover

Oracle’s Moves Since PeopleSoft March 28, 2005: Oracle acquires identity management software company

Oblix. April 11, 2005: Oracle completes purchase of retail software maker Retek. June 2005: Oracle acquires TripleHop, a context-sensitive search

technology, from TripleHop Technologies, Inc., and high performance database technology from TimesTen.

July 2005: Oracle purchases content integration technologies from Context Media.

July 18, 2005: Oracle announces that they have completed the acquisition of ProfitLogic, LLC, a company that produces software that analyzes consumer demand patterns.

August 2, 2005: Oracle announces that they are acquiring a 61% stake in the Indian banking software company, i-flex.

August 26, 2005: Oracle announces that they are working with Sun Microsystems to create database infrastructure packages.

September 12, 2005: Oracle announces that it has agreed to buy Siebel Systems for $5.85 billion.

Group Discussion

Why do you think that these kind of business mergers and acquisitions (M&As) are happening?

Do you think that more M&As will occur?