Oracle Plays Down Its Own Importance

Oracle spent much of the day at the antitrust trial challenging its takeover bid for PeopleSoft contending that many of its largest customers have experienced great success in bypassing its technology.
Oracle spent much of the day in court Thursday making the argument that a lot of its largest customers have experienced great success in bypassing its technology.

Oracle customers, testifying for the defense in the antitrust trial challenging Oracle's takeover bid for PeopleSoft, told the court they have a number of human-resources management and financial-management options other than being at the mercy of Oracle and PeopleSoft.

Oracle attorney Daniel Wall told InformationWeek "Working at Oracle, I don't say this with a lot of glee, but companies are figuring out that HR and financial is not what (Oracle) is in the business for, and so the cheapest way they can do it is what they're looking for."

Oracle's position is that some of those cheaper options include: doing nothing—and using software even when the license runs out, outsourcing, or using homegrown methods.

An executive with Fidelity testified that in the next 18 months, his company will be replacing its Oracle human-resources technology with a homegrown system to support its outsourcing services to customers.

A Bank of America witness said his company was able to save money and improve quality and service by opting to replace its PeopleSoft HR and payroll system with the outsourced services of Fidelity.

Brian Mearns, director of personnel service delivery for Bank of America, said that during the economy's recent lean years when he was refused approval to upgrade his PeopleSoft implementation, he found a viable option in outsourcing.

While at Fleet Boston--before it was recently acquired by Bank of America--Mearns said he conducted a lengthy evaluation of all of Fleet's options, which included doing nothing and staying with his current software, upgrading the software, or outsourcing. He even called IBM to inquire about its experience with outsourcing.

Mearns said Fleet was by no means forced to fit into a cookie-cutter piece of technology used by Fidelity. "They effectively met our specific requirements, and we were not made to conform to a standard system that restricted our ability to meet our requirements." He added that at first the outsourcing system caused some constraints to the bank's way of doing things, but that "the compromises actually turned out to be improvements" in service. He said the five-year contract cost $21.9 million. The outsourcing venture has worked so well that Bank of America has continued to use the operations method after the merger.

As is typical at this stage of the trial, Oracle attorney Wall made a move to dismiss the case at the end of the day. In his lengthy speech to Judge Vaughn Walker, Wall stated that the government had failed to prove its unilateral effects theory--that prices will rise if a major ERP vendor is taken away, and that the government should not have eliminated SAP as a viable contender in the ERP market because customers will have the German-based company as an option.

Justice Department attorney Claude Scott countered that the government has shown evidence that prices will likely increase because customers will have fewer competitors to deal with; and that while SAP is a major player worldwide, it's not appropriate to include the company in the geographic space of the United States, because the United States isn't influenced by non-U.S. pricing.

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