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.
If you missed a recent Short
Take, click here for a listing.
|
