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

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

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

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

5. 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

6. 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

7. 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

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

9. 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

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

11. 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."

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

13. 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

14. 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

15. 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

16. 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)

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

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

19. 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)

20. Sources