Oracle vs. PeopleSoftOverviewOraclePeopleSoftEnterprise Resource Planning (ERP)Why Does Oracle Want PeopleSoft?Oracle Needs PeopleSoft!PeopleSoft’s ReactionPeopleSoft’s Reaction Cont’d.Oracle’s ReactionDOJ Gets InvolvedAfter DOJ RejectsOracle’s ConcernsResults of the Oracle|PeopleSoft MergerOracle: Trouble in Paradise1. Mature Technology2. CompetitorsOracle’s Innovation StrategyOracle’s Shopping SpreeSourcesOracle vs. PeopleSoftRyan MartinSean OgleTiare Packard5/16/06OverviewWho are Oracle and PeopleSoft?What is ERP?Why did Oracle acquire PeopleSoft?What has happened since the acquisition?OracleFounded in 1977 Larry Ellison is CEOOne of largest developers of “Database Management Systems”PeopleSoftFounded in 1987 by David DuffieldProvides software to thousands of large companies and governmentsSpecializes in ERP solutionsEnterprise Resource Planning (ERP)Management Information Systems that integrate all or part of a business’s operations or production/service“Back office” systemsBest practices and re-engineering processVery expensive to implement“Productivity Paradox” appliesWhy Does Oracle Want PeopleSoft?Oracle is #1 in databases, but losing to SAP in ERP systemsPeopleSoft had the capabilities Oracle neededOracle wanted to gain market share and ensure long-term growthOracle Needs PeopleSoft!Oracle’s need for ERP leads it to wanting to acquire PeopleSoftLack of optionsPeopleSoft does not want to be boughtBecomes tactical fightPeopleSoft’s ReactionBuys JD Edwards - Friendly merger$1.7BBecomes bigger and more expensive to acquirePeopleSoft’s Reaction Cont’d.Poison pill1. Reduced support = 2x to 5x fees for purchase2. Stock trick = dilute stock to take away ownership3. Power shift towards directors rather then shareholdersOracle’s ReactionInsists and raises bid - Hostile takeoverOriginal bid $16/shareJune 03- 2 weeks later $19.50/shareFeb 04- Raise 33% to 9.4B or $26/shareDOJ Gets InvolvedFeb 2004 Department of Justice: Anti-trustSAP and MicrosoftInvolvement? Sat back and watchedDenied because software companies that make ERP software for "mid-market" customers also compete for those same "large complex enterprises."After DOJ Rejects May 04- Lower to $7.7B or $21/shareNov 04- $9.4B or $24/shareDec 04- Final bid @ $10.3B or $26.50/sharePeopleSoft accepts @ 100% above original bidOracle’s ConcernsLargest merger in software industry historyConcerns over keeping PeopleSoft’s culture and employeesFounder David Duffield had “Kill Oracle” pep rallyResults of the Oracle|PeopleSoft MergerJanuary 2005: Oracle laid off nearly 50% of PeopleSoft’s 11,000 employees90% of PeopleSoft product development and support employees retainedProject FusionThe final integration of Oracle and PeopleSoft/J.D. Edwards productsFinal product available in 2008Oracle: Trouble in ParadiseTwo issues to deal with1. Database computing is a mature technology2. Competition between established providers is fierce and smaller competitors are entering market1. Mature Technology Traditional database firms such Oracle and IBM Struggle to gain new customersSystems designed for “structured” dataRunning ModelsNumber CrunchingForecastingTime to innovate, but how?Day Software: developed a system for “unstructured” dataAudio filesImagesWeb video contentDocuments (ex. Word or Excel)Trend towards ‘diskless’ databases (much faster; will benefit tremendously from 64-bit computing)2. CompetitorsBiggest threat is small players offering innovative improvements on current productsNew entrants into marketOracle’s solution: Buy them…Oracle’s Innovation StrategyProject FusionOffering open source software (i.e. Linux)Buy out competitionReaching out to different marketsOracle’s Shopping SpreeDecember 2004: PeopleSoft- ERP ($10.0B)March 2005: Oblix- Identity Management (undisclosed amt)April 2005: Retek- Retail software ($670M)June 2005: Triple-Hop- Context search July 2005: Context Media- Content Integration ProfitLogic- Demand analysisAugust 2005: i-flex- 41% share Indian banking softwareSeptember 2005: Siebel Systems- CRM ($5.85B)October 2005: Innobase- Storage engine November 2005: Thor Tech & OctetString- Identity ManagementJanuary 2006: 360CommerceFebruary 2006: SleepyCat- Open-sourceApril 2006: Portal Software- Billing software
View Full Document
Unlocking...