Oracle Starts To Cut And Paste From PeopleSoft Apps

January 13, 2006

7 Min Read

Oracle has come a long way from the take-no-prisoners approach it took during its pursuit of PeopleSoft before acquiring the company last year. Since then Oracle executives have worked hard to keep PeopleSoft customers in the fold, but the company has never been all that clear about just how PeopleSoft and JD Edwards applications would mesh with Oracle's.

Now, with close to 9,000 developers working on the Fusion project to deliver Oracle's next big-business app suite, Oracle executives last week provided some glimpses of what the merged applications might look like, and what pieces might be kept from the old acquired applications. On Jan. 18, Ellison and other project managers are scheduled to take a stage at San Francisco City Hall to talk more about Fusion's progress. Oracle's timetable calls for delivering the first Fusion components next year and a full Fusion suite in 2008.

The idea is to build features from PeopleSoft and JD Edwards applications into Oracle's E-Business Suite to create a new generation of service-enabled Java applications. Software from Siebel Systems Inc. will be the core of Oracle's Fusion CRM applications; Oracle's acquisition of Siebel is expected to be completed within weeks.

'There will be some things that we thought were cool, but no one ever used.... This is a chance to do it the right way.'



"There will be some things that we thought were cool, but no one ever used.... This is a chance to do it the right way."
--Charles Phillips, Oracle's president

The job involves redeveloping millions of lines of code originally written in proprietary languages such as PeopleSoft's PeopleTools, breaking them into core processes and functions, and deciding whether and how to add that functionality to Fusion. "Even if it may not be the most elegant or cool feature, if people are using it, and they think it's important, then it needs to be there for people to upgrade," Oracle president Charles Phillips says. "There will be some things that we thought were cool, but no one ever used, so that doesn't make it. This is a chance to do it the right way."

For example, Oracle wants to embed more training and self-help features from PeopleSoft's software into its applications, speeding user adoption and reducing calls for technical support. "PeopleSoft had a pretty good technology for doing this, better than Oracle's," says John Wookey, who, as senior VP for application development, is leading the project. Oracle also is picking up the conventions for generating reports from PeopleSoft and JD Edwards applications, going beyond Oracle Reports. But "customers won't have to stop using their existing reports," he says.

Oracle also figured out that PeopleSoft was more successful selling ERP applications to state and local governments because it understood their need to match tax and fee collections to spending. Oracle's financial receivables apps can't act as a control on payables the way government needs, admits Steve Miranda, VP of financial applications development. That capability may have applications beyond government customers, he says.

Many applications use a "Set ID" function to establish the identity of an employee or customer. Oracle found PeopleSoft apps provided flexible fields in the Set ID format, which allows users to add a mail stop to a standard address or make other changes specific to a user's business operation. Oracle is adopting the concept for Fusion.

Middleware Is Critical
Oracle is playing up the role its middleware products--which manage communications among applications and databases, for example--will play with Fusion applications running in a service-oriented software environment. During the application revamp, Oracle has the opportunity to build apps that are compatible with new standards, such as Business Process Execution Language or Web Services-Reliable Messaging, drafted by the Oasis standards consortium. "A lot of those standards are in middleware," Phillips says. "The next generation of applications will be a lot more middleware dependent, so you have to start there." Oracle emphasizes that its applications will work with middleware from other vendors such as IBM and BEA Systems Inc., though that will take some convincing for many customers, who know Oracle would like its applications business to feed its middleware and database sales.

If it's truly neutral, that could give Oracle an advantage. In a report this month on a survey of 100 North America CIOs, Merrill Lynch found that 16% would buy an integrated stack of software from Oracle, including applications and middleware, compared with 11% from SAP and 14% from Microsoft. "We already have 27,000 middleware customers," Phillips says. Still, neutrality is the biggest seller--39% prefer buying such products from multiple vendors.

SAP is working hard to get its customer base to accept its middleware, the NetWeaver application integration and deployment platform. But executive VP Peter Graf concedes that customers who already have invested in middleware from other vendors, such as IBM's WebSphere, BEA Systems' WebLogic, or Oracle's middleware, wonder why they need a second set from SAP.

Oracle still has a lot of work to do to overcome skepticism from PeopleSoft customers. It has tried, providing upgrades to the acquired applications and promising to sell limited lifetime support for those products. In addition, Oracle is expanding platform support for its applications. The most popular platform for JD Edwards' applications is IBM's iSeries (formerly the AS/400), a system Oracle previously spurned. But now the company understands that technical support for iSeries applications is a price it must pay to retain JD Edwards customers. Phillips was noncommittal on whether Fusion will run on non-Oracle databases. Oracle has been in discussions with IBM and Microsoft on database "standards" that could make it possible to run Fusion on IBM's DB2 or Microsoft's SQL Server, but it's too early to tell what the outcome of those efforts will be, Phillips says.

The stakes are high for Oracle. Sales of its cash-cow database software have been slowing: New license sales of Oracle's database and middleware grew only 3% in the first half of fiscal 2006. Oracle is counting on its applications to boost its top-line growth as well as spur sales of its other products.

But any delays could cause application customers to defect to SAP, Oracle's chief rival in applications, or Microsoft, which has aspirations to grab a bigger piece of the enterprise-application market. AMR Research estimates that Oracle holds 12% of the worldwide $47 billion application market, not including the pending Siebel acquisition, compared with SAP's 18%.

Fight For First, pie chartFull-Court Press
Oracle isn't sparing any resources to bring Fusion to fruition. The company has managed to retain 90% of the PeopleSoft and JD Edwards' development and technical-support staff. It also has added programmers from its Retek Inc. buyout and other acquisitions. Altogether, Wookey has an army of 9,000 developers, with "practically all of them" assigned to the Fusion project, he says.

For some customers, Oracle's plans come as a welcome relief. Bed manufacturer Select Comfort Corp. became a Siebel customer just weeks before Oracle disclosed its plans to acquire Siebel, and CIO Mike Thyken faced the task of integrating his Siebel CRM apps with his Oracle manufacturing, sales, and service applications. With the acquisition, Thyken says that integration burden will fall on Oracle's developers.

Thyken is taking a wait-and-see approach as to whether Oracle can deliver Fusion on time. "A lot of it's in the execution," he says. "If they can deliver on the promise, they become a very strong player. If they don't execute, then everything's up in the air."

Other IT executives seem less worried about the Fusion timetable. The city of Orlando, Fla., eventually will have to spend $100,000 to upgrade its JD Edwards EnterpriseOne applications to version 8.12, the next scheduled upgrade, or Fusion, once it's available. John Matelski, chief security officer and deputy CIO, says he can afford to wait and see which is the more viable option.

"Everything Oracle has done to date, including offering lifetime support, has increased Oracle's costs but protected customers' investments," Matelski says. "That's provided me with a certain amount of confidence."

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