SAP vs. PeopleSoft: The gloves are off

In this issue of Industry Insider, ZDNet's Dan Farber says the war of words between SAP and PeopleSoft may make interesting read but the real issue for enterprises is which vendor can provide the most reliable, cost-effective solutions."Henning Kagermann [SAP CEO] talking about flexibility and adaptability is like [former French prime minister] Francois Mitterand talking about having a deep affection for American tourists.

In this issue of Industry Insider, ZDNet's Dan Farber says the war of words between SAP and PeopleSoft may make interesting read but the real issue for enterprises is which vendor can provide the most reliable, cost-effective solutions.

"Henning Kagermann [SAP CEO] talking about flexibility and adaptability is like [former French prime minister] Francois Mitterand talking about having a deep affection for American tourists. It's not true. Just because they say it's true doesn't make it true."

That's what PeopleSoft CEO Craig Conway said during his keynote at his company's annual Executive Leadership Summit earlier this month. Conway also accused Kagermann of cribbing his speech at the SAP SAPPHIRE conference from a presentation he gave earlier this year.

The gloves are off as PeopleSoft has concluded its acquisition of J.D. Edwards, cementing its position as the clear #2 enterprise application provider behind SAP. Conway feels more confident that it can fend off Oracle's recently lowered hostile take over bid, and now has his sights set on an "assault on Mount SAP."

I asked Linda Lazor, vice president of global product marketing at PeopleSoft, to provide some specifics regarding Conway's remarks. She described SAP as lacking in total ownership experience (TOE), which she defined as cost benefits in terms of fewer IT staff required, speed of implementation, usability and ongoing operations and maintenance. For example, PeopleSoft claims that it has seen a 30 percent faster average time to complete over 140 key user tasks.

She also claimed that PeopleSoft has leapfrogged SAP with predictive analytics in PeopleSoft Enterprise CRM 8.9 and demand driven manufacturing, which allows companies to more accurately devise supply chain scenarios and to respond more quickly to changes in demand. She cited some independent studies and customer comments to support her arguments.

Page II: In this issue of Industry Insider, ZDNet's Dan Farber says the war of words between SAP and PeopleSoft may make interesting read but the real issue for enterprises is which vendor can provide the most reliable, cost-effective solutions.

SAP, Oracle, Siebel, Microsoft, IBM and others could come up with counter-claims, positive comments about themselves and disparaging remarks about PeopleSoft and each other. It's part of the smackdown American business culture. However, the bombast tends to make vendors' claims even more suspect than those made during civil discourse.

PeopleSoft crowed that it has reduced the number of steps to deploy application updates by 80 percent and disparaged SAP's track record in that area. SAP did recently introduce a change management toolset to reduce the complexity and employee hours required for new product installations and patching. It sounds like good competition yielding better products and services, as well as some mud slinging.

The rhetoric and mud slinging are a side show, however. The issue for enterprises is which vendors can provide the most reliable, cost-effective solutions that can scale with organisational growth. The proof is in the reference accounts and Peer Company reviews.

Post-bubble customers are not willing to spend without a high degree of certainty that a pre-defined ROI can be achieved in months and not decades. And, existing customers of PeopleSoft and others are demanding more accountability from the vendors in order to stay within the fold.

The big three enterprise business applications vendors-SAP, PeopleSoft and Oracle-are all "relatively" safe bets. They have track records, reference accounts, support infrastructures, billions in revenue and R&D and the motivation to invest in product development. They have some happy customers and some who are not pleased with what they bought.

They are account controllers, with the potential to lock-in customers, buttressed by the high cost of switching and high-touch handling when they are in a customer acquisition mode. They are consolidators, scooping up smaller companies to fill out their portfolios or for defensive purposes, and in some cases swallowing the big fish, as PeopleSoft did with J.D. Edwards and as Oracle wants to do with PeopleSoft.

They are leaders in their own ways, and come at the varied markets segments and industries with different strengths and weaknesses. They all are heading in the same direction, with comprehensive, highly integrated enterprise application platforms that include a suite of business applications, portals, application servers, integration middleware and master data management. Open standards, business process management, on-demand, and Web services and services-oriented architecture (SOA) are their common buzz words.

Page III: In this issue of Industry Insider, ZDNet's Dan Farber says the war of words between SAP and PeopleSoft may make interesting read but the real issue for enterprises is which vendor can provide the most reliable, cost-effective solutions.

With a service-orientation, enterprises can better leverage their IT investments and reduce the complexities of integrating multi-vendor applications. SAP's NetWeaver and PeopleSoft's AppConnect, for example, are service-oriented platforms for integrating applications and building solutions from discrete components spanning multiple vendors. Oracle's Customer Data Hub helps companies gather data from multiple sources centrally.

They are also aiming products at the mid-market (moving down market), preaching that less customisation is a good thing, and developing tighter technology-integration relationships with Microsoft. SAP and Microsoft are working on to connecting their respective Web services products, and Oracle recently said that it would make it easier to write Windows-based applications that access data stored in an Oracle database. Earlier this year, Sun and Microsoft put aside differences to make their products interoperate better.

While the vendors are preaching more openness and plug and play with Web services, the reality is that they want to sell end-to-end software stacks. A recent trend is prepackaged bundles of industry-specific applications, such as PeopleSoft's EnterpriseOne product family. SAP introduced "quick fix" packages of software and services that address integrating tasks such as e-mail applications or data-archiving tools with the company's ERP and CRM systems. As Oracle CEO Larry Ellison testified in the antitrust case involving his company's hostile bid for PeopleSoft, companies acquire integrated enterprise software suites from the big three vendors because devising business systems from multiple vendors is "staggeringly difficult."

Ellison's statement is self-serving, but it also reflects reality, even with the advent of Web services and SOA. Mixing and matching components, and vendors, is never going to be as easy and as cost effective as a more monolithic solution. For SAP's customers, for example, the NetWeaver platform is going to be more cost effective than deploying components from competing vendors, such as IBM.

Yet, customers don't want to be locked into a single vendor. With SOA and standards switching costs are going down, and it will allow different parts of an enterprise software infrastructure to be more easily swapped. Going forward, with just a few vendors dominating the market, customers will have to consider swapping to gain some leverage in negotiating terms and to ditch vendors that can't deliver.

We are moving from more of a build it yourself model to automated assembly of components and composite applications. It is a decade long trek that will have many challenges, just as moving to client/server did in a previous decade. The key for any enterprise in this evolving IT world is to have people who know the technology, understand business needs of the organisation, can build the IT requirements documents, vet the vendors and negotiate terms. If you don't have people who fit that description, your will be seriously handicapped versus those companies who have invested in hiring and keeping those kinds of rare individuals.

biography
Dan Farber is editor-in-chief, ZDNet US.

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