Microsoft last week offered discounts on its business applications in hopes of luring PeopleSoft customers displeased with Oracle’s pending $10 billion buyout of their vendor. But industry watchers say the overtures are unlikely to trigger anything beyond a trickle of converts.
Microsoft last week offered discounts on its business applications in hopes of luring PeopleSoft customers displeased with Oracle‘s pending $10 billion buyout of their vendor. But industry watchers say the overtures are unlikely to trigger anything beyond a trickle of converts.
Experts say the complexity of migrations for business software, which is generally highly customized, is one factor. In addition, many say that Microsoft cannot match the level of sophistication of the software PeopleSoft customers now use.
However, some say that Microsoft’s primary target, users on the former J.D. Edwards applications PeopleSoft acquired in 2003, could be swayed because many applications run on aging IBM AS400/iSeries platforms. Experts say a Windows infrastructure might attract those users, especially small and midsize companies looking at commodity hardware.
“I don’t expect to see a thundering herd of ex-PeopleSoft customers riding up to Redmond,” says Joshua Greenbaum, principal with Enterprise Applications Consulting. “For a large number of these customers, it would entail an entirely new platform and going with a company whose flagship manufacturing product is not well known in the U.S. This offer is reflective of Microsoft’s limited grasp of whatever opportunity could be here.”
Microsoft’s offer is a 25% discount on licensing and support on all of its business applications, but in particular Axapta for users of PeopleSoft World, and EnterpriseOne, and Great Plains for those on PeopleSoft Enterprise.
“The migration offer is clever, but I don’t think it will be successful,” says Bruce Richardson, an analyst with AMR Research. “The licensing is the smallest part of the bill. It is the time and cost of getting everything installed. That can be five to 10 times what you pay for the software.”
But according to Richardson, users of the former J.D. Edwards software might be swayed to change to low-cost Intel hardware and Microsoft’s promise to tightly integrate its business applications with Office.
Microsoft officials say they see an opportunity to convert PeopleSoft customers with fewer than 500 employees.
The business applications market remains a difficult for Microsoft. It has backed off claims of growing its Business Solutions Group to $10 billion in annual revenue; Microsoft also has yet to turn a profit in the division. But over the past seven months, Microsoft has introduced new versions of its Great Plains, Solomon and Navision business applications, with Axapta slated for an upgrade this year. All that comes after the company quieted talks about Project Green, a complete rewrite of its business application code on the .Net Framework.
Microsoft is not alone in wooing PeopleSoft customers. SAP has approached these customers since the J.D. Edwards merger. Vendor SmartDB next month will introduce PS2O, a customization of its Workbench tool kit that systems integrators employ to migrate PeopleSoft users to Oracle. Lawson Software, which develops business applications, plans to make a revised migration offer in the coming weeks, according to company officials.
“A migration depends on what infrastructure technology a company deals with and is comfortable with. What IT capabilities they have from a personnel perspective. Those will be huge determinants as to the attractiveness of these offers,” says Mike Dominy, director of enterprise services for The Yankee Group.
