For some VARs, last year ended with a bang — PeopleSoft’s capitulation to Oracle Corp., a deal that’s supposed to be consummated by the time you read this.
It’s explosive because of the impact it will have in the race with SAP and Microsoft to dominate the market for enterprise resource planning
applications (ERPs) aimed at mid-sized businesses.
And it is a race. “”We have been watching for someone to emerge as a leader (after PeopleSoft scooped up J.D. Edwards 18 months ago), and that has not happened,”” observed Billy Maynard, director of ERP research at Gartner.
The picture could become clearer as early as this month if Oracle reveals — as promised — more details of its strategy for absorbing PeopleSoft resellers and products.
Many partners are anxiously waiting, and not just those in the PeopleSoft camp. Also interested are integrators who have yet to decide which software company to back, or who may want to add another offering to their portfolio.
“”I think there’s a channel war brewing,”” said Maynard. “”It’s going to be challenging for these vendors to aggressively build out their channels to meet their business plans for this market.””
Already shots are being fired.
“”We think we’re the safe haven in a fairly turbulent time,”” Jeffrey Watts, senior vice-president of SAP Canada, commented after the Oracle deal was announced.
“”I think it’s an opportunity,”” Nancy Teixeira, ERP product manager at Microsoft Canada, said of the deal. This month, with the help of the company, partners will fire an e-mail broadside at potential customers to tout their offerings.
“”I think there’s still tremendous opportunities for PeopleSoft resellers,”” countered Dave Rumer, Oracle Canada’s senior director of marketing.
Oracle has made commitments to the next release of PeopleSoft Enterprise, he said, and will support the existing version for 10 years. Meanwhile Oracle will work on a merged product — although no release date has been set. Nor is there any cost estimate of what customers will have to pay for migrating to a new platform.
A slow-starter in the mid-market contest, Oracle had until now been relying on a lean version of its eBusiness Suite called Special Edition, which it has been offering for less than a year to existing partners. It can be purchased, or hosted by Oracle or its VARs.
Still, Michael O’Neil, managing director of IDC Canada, says data he’s gathered shows so far that Oracle is asked to bid more often on enterprise-level accounts than mid-market.
By scooping up PeopleSoft, it may be able to make a bigger mid-market play, especially if it leverages the buy to fatten its channel.
Complicating the picture, however, is the general agreement among industry analysts that PeopleSoft fumbled the JDE acquisition, displeasing some JDE resellers and customers.
Still, PeopleSoft resellers should be optimistic, said O’Neil, who also oversees its channel research, if only because Oracle’s 18-month battle for the company is over.
“”It had to be almost impossible to sell PeopleSoft product with the uncertainty hanging over them,”” he said.
SAP has two SMB offerings: All-In-One, a pre-configured version of the full-fledged mySAP sold through seven Canadian partners; and Business One, an application for smaller companies gained from an acquisition and sold by 16 VARs here.
A measure of the company’s ambition is it wants to boost the number of Business One partners to 40 in two years.
“”We have people beating down our doors to join the programs,”” claimed Watts of SAP Canada. “”A lot of the partners are treating this as a gold rush. It’s time to stake your territory, stake your claim.””
The company is fussy about who it accepts, demanding a business plan from applicants. Being an SAP partner means also making sure the parent company gets up to 20 per cent of any deal in services. “”We want some oversight because it’s SAP’s name,”” he explained.
However, O’Neil said the company is still more attuned to its main customers, large enterprises. “”My own question is can they build an effective sales and market support channel to allow it to address the needs of the mid-market?””
Microsoft’s perceived advantage, its huge reseller base, is offset by offering three products: Great Plains, Navision and Axapta, each aimed at a different segment of the market.
“”It definitely can contribute to confusion because there is overlap in functional capabilities,”” admitted Teixeira of Microsoft Canada. “”But we feel we have unique footprints for each.”” For example, she said, Great Plains can be enhanced with add-ons from ISVs, while Navision’s source code can be customized.
This year Microsoft has identified core industries or verticals for each application in a bid to further differentiate the products, and it expects its partners to get the message out.
“”To scale, we’re going to have to get a lot better and more focused on delivering marketing through our partners,”” said Teixeira.
One advantage Microsoft has is its goal of merging all three platforms into one, industry analysts agree. But that’s been put off until perhaps the end of the decade until the Longhorn version of Windows is released.
However, at least it has a vision, says Paul Hamerman of Forrester Research. PeopleSoft “”was unable to articulate a long-term strategy. They were managing their business quarter to quarter.””
Which brings us back to what Oracle will do with its new assets. Hamerman believes the merged product the company is talking about won’t work in the mid-market. It will have to do something else — perhaps buying NetSuite, which sells a hosted service to SMBs.
Is that the sound of another explosion?