Ryan Martin Sean Ogle Tiare Packard 5/16/06 Oracle vs. PeopleSoft Ryan Martin Sean Ogle Tiare Packard 5/16/06

Overview Who are Oracle and PeopleSoft? What is ERP? Why did Oracle acquire PeopleSoft? What has happened since the acquisition?

Oracle Founded in 1977 Larry Ellison is CEO One of largest developers of “Database Management Systems”

PeopleSoft Founded in 1987 by David Duffield Provides software to thousands of large companies and governments Specializes in ERP solutions

Enterprise Resource Planning (ERP) Management Information Systems that integrate all or part of a business’s operations or production/service “Back office” systems Best practices and re-engineering process Very expensive to implement “Productivity Paradox” applies

Why Does Oracle Want PeopleSoft? Oracle is #1 in databases, but losing to SAP in ERP systems PeopleSoft had the capabilities Oracle needed Oracle wanted to gain market share and ensure long-term growth

Oracle Needs PeopleSoft! Oracle’s need for ERP leads it to wanting to acquire PeopleSoft Lack of options PeopleSoft does not want to be bought Becomes tactical fight

PeopleSoft’s Reaction Buys JD Edwards - Friendly merger $1.7B Becomes bigger and more expensive to acquire

PeopleSoft’s Reaction Cont’d. Poison pill Reduced support = 2x to 5x fees for purchase Stock trick = dilute stock to take away ownership Power shift towards directors rather then shareholders

Oracle’s Reaction Insists and raises bid - Hostile takeover Original bid $16/share June 03- 2 weeks later $19.50/share Feb 04- Raise 33% to 9.4B or $26/share

DOJ Gets Involved Feb 2004 Department of Justice: Anti-trust SAP and Microsoft Involvement? Sat back and watched Denied because software companies that make ERP software for "mid-market" customers also compete for those same "large complex enterprises."

After DOJ Rejects May 04- Lower to $7.7B or $21/share Nov 04- $9.4B or $24/share Dec 04- Final bid @ $10.3B or $26.50/share PeopleSoft accepts @ 100% above original bid

Oracle’s Concerns Largest merger in software industry history Concerns over keeping PeopleSoft’s culture and employees Founder David Duffield had “Kill Oracle” pep rally

Results of the Oracle|PeopleSoft Merger January 2005: Oracle laid off nearly 50% of PeopleSoft’s 11,000 employees 90% of PeopleSoft product development and support employees retained Project Fusion The final integration of Oracle and PeopleSoft/J.D. Edwards products Final product available in 2008

Oracle: Trouble in Paradise Two issues to deal with 1. Database computing is a mature technology 2. Competition between established providers is fierce and smaller competitors are entering market

1. Mature Technology Traditional database firms such Oracle and IBM Struggle to gain new customers Systems designed for “structured” data Running Models Number Crunching Forecasting Time to innovate, but how? Day Software: developed a system for “unstructured” data Audio files Images Web video content Documents (ex. Word or Excel) Trend towards ‘diskless’ databases (much faster; will benefit tremendously from 64-bit computing)

2. Competitors Biggest threat is small players offering innovative improvements on current products New entrants into market Oracle’s solution: Buy them…

Oracle’s Innovation Strategy Project Fusion Offering open source software (i.e. Linux) Buy out competition Reaching out to different markets

Oracle’s Shopping Spree December 2004: PeopleSoft- ERP ($10.0B) March 2005: Oblix- Identity Management (undisclosed amt) April 2005: Retek- Retail software ($670M) June 2005: Triple-Hop- Context search July 2005: Context Media- Content Integration ProfitLogic- Demand analysis August 2005: i-flex- 41% share Indian banking software September 2005: Siebel Systems- CRM ($5.85B) October 2005: Innobase- Storage engine November 2005: Thor Tech & OctetString- Identity Management January 2006: 360Commerce February 2006: SleepyCat- Open-source April 2006: Portal Software- Billing software (£225M)/($450M)

Sources http://www.oracle.com/corporate/press/2004_dec/acquisition.html http://www.sap.com/company/pdf/BWP_AR_Greenbaum.pdf http://www.theregister.co.uk/2003/11/11/oracle_chokes_on_peoplesofts_poison/ http://www.zpub.com/un/un-le.html http://money.cnn.com/2004/12/13/technology/oracle_peoplesoft/ http://en.wikipedia.org/wiki/Oracle_Corporation http://en.wikipedia.org/wiki/Peoplesoft http://www.fool.com/News/mft/2005/mft05031820.htm http://www.eweek.com/category2/0,1874,1743371,00.asp http://www.eweek.com/category2/0,1738,1780193,00.asp http://www.eweek.com/article2/0,1895,1752305,00.asp http://www.informit.com/articles/article.asp?p=458692&seqNum=1 http://www.line56.com/articles/default.asp?NewsID=6431 http://www.line56.com/articles/default.asp?NewsID=6454 http://www.dmreview.com/article_sub.cfm?articleId=1009161