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New Orleans

No News Is...

With what has become a familiar mix of canniness, disingenuousness and justified pride, PeopleSoft announced to 8200 people in New Orleans this week that there was...no news. (By the way, my counts are always lower than the announced counts because I count the number of people in the room at the keynote. Gives me something to do.)

No news is good news for investors, however, as there seems to be every reason to believe that PeopleSoft can do well in the short term. The worry here is that the future is being mortgaged.

In this short piece, we'll talk about highlights. Next week, we'll do a somewhat longer piece on PeopleSoft's prospects.

A Shift in the Customer Base. At the conference, it became abundantly clear where PeopleSoft's margin of success has been coming from: public sector (which includes universities). Public sector now accounts for 25% of license in the Americas, up from 15%, and there's more to come. PeopleSoft is in 650 universities, 14 states, and 14 of 15 cabinet level departments; there are a lot more states to go, and even within the states, there are far more seats to sell. Though SAP and JD Edwards compete in the space, they don't have the share or acceptance in the core HR (especially) and financial modules.

I have said for a long time that sales by Manugistics to the government are expensive sales: long lead times, expensive support. This is far less true for PeopleSoft. Government IT budgets are set at levels that support a program based on Cobol, and the core processes are well understood, so both the sales case, and the post-sales support are more straightforward than they are for supply chain.

Product Announcements. This analyst honestly wonders what they're spending their development budget on. With a typical flourish, Messrs. Conway, Gupta, and Bergquist announced that they were going to be a broad-based suite that was best-in-breed. But the new products didn't show it. There is a new global consolidation product designed to compete with Hyperion. (PeopleSoft has always had global consolidation, but this adds in a data warehouse.) There are some Homeland Security products, namely a foreign student visa tracking program, and a human capital management package for police and firemen. Not announced here, but released and with some sales is a sourcing product that got a big, if controversial push from AMR.

Somewhat thinner are some "vertical" portals in SRM, which display old data in the multiple windows of a portal. And finally, there is AppConnect, an EAI suite that is a "repackaging," according to Rick Bergquist, of existing PeopleSoft products.

PeopleSoft made a lot of money over the past year or two with a very simple portal product that they were able to sell cheaply. Existing installations said, "Oh, portal, PeopleSoft, fine," and wrote a check. (The $50,000 price tag was well within signing authority for many CIOs.) AppConnect, the sourcing product, and the consolidation all appear to be using the same strategy, and among the three should provide a similar level of license next year, even though AppConnect includes that same portal as part of the package.

Upgrades. There was a lot of buzz about upgrades. PeopleSoft claims that there 1200 upgrades live and 1800 projects. I talked to quite a few customers and integrators. These "live" upgrades are not for the complete suite; I found literally no one that had upgraded everything they had, and several cases where the upgrade of HR or financials was not planned any time soon. IT staffs are enthusiastic about the benefits, but they still see it as a major project.

In one case, management had rejected the original $8 million price tag for an upgrade of financials, rejected the more realistic $5 million proposal, and then rejected a "way lowball" $1.5 million proposal as not providing enough benefit.

For some customers, upgrades were easy; for others, they are horrible. As usual, it depends a lot on original implementation decisions. All in all, PeopleSoft seems to be upgrading somewhat faster and more effectively than Oracle, but it is by no means quick. It is also very clear that the effectiveness of upsell strategies depends a lot on having an upgraded installed base, which they don't have.

Messages. In the Conway era, the messaging has always disappointed me, and this was no exception. The company has stopped providing either the technical leadership or the fun that it made it seem so very promising, and has been substituting a profile whose calculations seems to me to be a little too visible.

In a gesture whose taste I will not comment on, Conway chose to portray his company as contributing to our recovery during a "year like no other." The new Homeland Security products apparently makes PeopleSoft patriotic, and the visibility that a product like PeopleSoft gives will help CEOs feel more confidence when it comes to signing "the thing."

On this last point, other software companies should take note. Conway is undeniably canny here. Visibility into corporate operations and control from the top are messages that will help sell software these days at the C-level, both to new customers, and to existing ones, even though there is nothing new about it.

Another clever tactic is PeopleSoft's new "real-time enterprise" message. Again, it is nothing but a repackaging. (Hint: the reason a company is "real-time" is that it is integrated.) But the real-time message, as Bruce Richardson says, may have a broader appeal than the integration message. And hey, if the only thing new and improved is the phrase "New and Improved" on the box, and it sells, who am I to complain?

Next week, more on PeopleSoft's long-term prospects and strategies.

By the way, PeopleSoft executives confirmed that Chris Wong, founder of Skills Village, is leaving PeopleSoft and joining Agile in mid-September. I continue to believe that an acquisition of Agile is a non-starter, but I'm the guy who doesn't think much of the real-time enterprise.

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