Buyers' Market

Seismic shifts are in store for the enterprise apps industry. Are you ready?
The combined SSA GT and Baan will have its eye on acquiring companies with expertise in manufacturing, says Baan president Laurens van der Tang. A possible target is Manugistics Group Inc., which had General Atlantic Partners as one of its original investors.

And if PeopleSoft's purchase of J.D. Edwards is blocked by Oracle, it's not inconceivable that Microsoft would take advantage of the situation. Acquisition of J.D. Edwards would give Microsoft access to several thousand IBM iSeries and AS/400 users whom it could migrate to its own infrastructure, says the Yankee Group's Dominy. Microsoft execs were not available for comment.

When major acquisitions are announced, it's the uncertainty that puts many IT execs on edge. Staffing-services provider Manpower this month started implementing J.D. Edwards apps in the United States and Canada, but it was holding off deploying in other countries pending "a strong commitment from PeopleSoft that they'll continue to support [them]," Davidson says. Analysts expect that at its user conference this week J.D. Edwards will debut incremental improvements to its supply-chain and CRM apps.

Mark Federle, CIO at Weitz Co., a building contractor that uses J.D. Edwards AS/400 apps, is generally positive about a PeopleSoft merger. But if J.D. Edwards turns out to be a "less-than-contributing subsidiary, then significant change will happen fairly quickly, and that would be a concern." J.D. Edwards in its most recent quarter lost $393,000 on revenue of $203.5 million.

Other vendors are ready to capitalize on any uncertainty. Hostile takeovers have a tendency to disrupt customer relationships, SAP said in a statement. ERP vendor Deltek Systems Inc. even took out a full-page ad in The Wall Street Journal to pitch its smaller company as a bastion of stability and service as the big players duke it out.

Baan is doing its best to minimize customer nervousness. Van der Tang says Baan is on track to debut its next-generation platform in September. At Sonoco Products Co., a packaging manufacturer, VP and CIO Bernie Campbell says Baan "has done an excellent job working with customers" since Invensys plc put it on the block in April.

Consolidation in the industry may ultimately be a good thing. But right now, it's a confusing power play of ambition and market one-upmanship.

-- with Eileen Colkin Cuneo, John Foley, Tony Kontzer, Chris Murphy, and Rick Whiting