Conway: Oracle Bid Has Revitalized PeopleSoft - InformationWeek

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Software // Enterprise Applications
08:20 AM

Conway: Oracle Bid Has Revitalized PeopleSoft

The PeopleSoft chairman says customers have rallied around the company since Oracle began its hostile takeover bid, creating a stronger company.

When it comes to Oracle's proposed takeover of his company, PeopleSoft Inc. president and chairman Craig Conway is taking no chances. When Conway took the stage at the PeopleSoft Connect customer conference in Anaheim, Calif., on Monday, he brought along his dog Abbey--and bulletproof vests protected both.

The staging was a not-too-subtle reminder of the verbal jousting that has gone on between Conway and Oracle CEO Larry Ellison, who shortly after first proposing his company's takeover bid of PeopleSoft indicated that he would shut down the PeopleSoft product line and eliminate jobs. Conway, whose company recently completed its acquisition of J.D. Edwards & Co., responded by saying he would never sell his dog to a neighbor who had the intent of turning around and shooting the dog.

Following his keynote, Conway sat down with Information Week for a one-on-one discussion:

InformationWeek: You had a little fun with the Oracle and Larry Ellison situation. What kind of toll has the Oracle acquisition effort taken on you personally?

Conway: I think it has taken a toll on everyone. I think what people will remember about this whole saga is how galvanizing it has been to employees and the management team, and how it focused the company more quickly in regards to the J.D. Edwards acquisition. The result has been our customers rallying around PeopleSoft, and frankly our shareholders rallying around PeopleSoft. I think in a lot of ways it had the opposite effect on PeopleSoft than intended. It revitalized the PeopleSoft customers and created an even stronger company.

InformationWeek: You feel strongly that [Oracle's] intent was to offset the J.D. Edwards acquisition and cause a disruption in your business?

Conway: I'm not sure anyone has ever characterized it as anything different from that. Everything about it was consistent with trying to disrupt the acquisition, but overall there has been a great outcome. The acquisition was completed in six weeks, which is quite remarkable.

In June, when we were assembling our [acquisition] advisers, one of the most senior attorneys in the area of mergers and acquisition told us that the [advisory] team was not going to save the company, nor the management team. It would be the customers. We saw an enormous amount of customer support that enabled PeopleSoft to not only feel no impact that was disruptive, but instead left us with a positive impact. When the story is written next year or the year after, that will be what people write about--how customers just stood behind this company and were united in their determination to have PeopleSoft remain strong and healthy.

InformationWeek: As far as you're concerned, you believe this Oracle story is over?

Conway: I think the saga has been over since mid-July with the completion of the acquisition of J.D. Edwards. Everyone who has looked at this has said there are insurmountable obstacles [to a successfully Oracle bid]. There is no penalty to continue to extend the offer other than the brand damage to Oracle. There has never been more damage to a brand name than Oracle is doing to itself. Oracle is going to do something that is harmful to CIOs and then is surprised when their orders turn down?

InformationWeek: Where is PeopleSoft on the integration road with J.D. Edwards? Will this continue to be a moving target?

Conway: The only thing we worried about after we accelerated the acquisition of J.D. Edwards into a six-week time frame was that we didn't have as much time as we originally planned. We really scrambled to assemble about 18 or 19 integration teams. I challenged them to think of this as a brand new company, because we're so much bigger than PeopleSoft or J.D. Edwards [separately]. These teams worked for two weeks, and when they came back, it exceeded our original goals. It yielded more cost savings and synergies than we had thought. One of the unforeseen outcomes of the Oracle approach was that it galvanized employees. They put all their egos and personal agendas on hold.

InformationWeek: You mentioned in your keynote that one result of the economic downturn is that enterprise application software has reduced the need for employees and has contributed to the "jobless recovery" that some believe we are now seeing. Is this a legacy that's good for PeopleSoft and others in the enterprise applications software business?

Conway: I don't think it's good or bad. It's just a reality. Technology has always been able to improve operating efficiencies and solve business problems. That's true in boom or bust markets. In bust markets, they turn to technologies to save them money so they can achieve earnings projections. By using enterprise software, you can eliminate the intermediaries in business processes. They are eliminated, and you don't need to bring them back when the economy improves.

InformationWeek: Can there truly be a recovery if there are 9 million unemployed and companies are outsourcing development offshore that was once critical to the domestic software industry?

Conway: I don't think the jobless economic recovery is related exclusively to enterprise software makers. It's just one reason. Jobs that are added have increasingly been added offshore as well as onshore. We became conditioned to that phenomena in manufacturing, but we're not very well conditioned to that for customer service, or implementation and development of software. But look at places like California that traditionally was very important in incubating technology companies. Look at the legislation of the last four years. It's been overwhelming unfriendly to business. So is there is any surprise that businesses are moving outside of California? Some of those jobs are not only moving outside of California, but outside the United States.

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