ERP player PeopleSoft pushes forward

Enterprise software maker PeopleSoft has launched their new suite entirely online. The news bodes well for the company, and the analysts have good things to say.
Written by Jacqueline Emigh, Contributor

Fresh from last week's announcement of record Q3 financial results, ERP/CRM contender PeopleSoft is leveraging its annual users conference this week to roll out new enhancements to the "fully browser-based" PeopleSoft 8 suite, plus a major deal with IBM for joint marketing of its HR (human resources) and consulting services.

Over the year ahead, PeopleSoft plans to forge other new partnerships, especially in the ASP arena, while reducing its R&D spending and investing more resources in marketing, officials said at the conference in Los Angeles.

During speaking appearances at the show, PeopleSoft CEO Craig Conway is pointing profusely to the financial results, which showed revenues of US$131.5 million in software license fees alone, double the figure for the third quarter of the previous year.

Analysts attending the conference are attributing these results to the combined effects of PeopleSoft's product in particular and improving market conditions for ERP software in general.

Laura J, Lederman, a financial analyst at William Blair & Company, suggested that it's a relatively easy matter for ERP vendors to show sales improvements over 1999.

Now that the year 2000 crunch is over, it's easier for IT departments to devote resources to ERP projects, she suggested. "But PeopleSoft 8 is also a very good product," the analyst added.

In a keynote speech at the PeopleSoft conference on Monday, Conway insisted that unlike Oracle 8i, PeopleSoft 8 requires "absolutely no code on the browser."

According to Conway, users have been telling PeopleSoft, "We want you to bake the Web into everything."

The CEO also mentioned the suite's "global payroll engine" as a key selling point, particularly in terms of helping PeopleSoft to keep increasing in Europe, a stronghold of German-based SAP, another ERP rival.

Many of the 15,000 users present at this week's conference in Los Angeles seemed very enthusiastic over PeopleSoft's move to an entirely browser-based architecture, citing advantages ranging from lower software maintenance costs to better integration with documents authored by end users.

James D. Marinelli, a senior programmer and system analyst at Sunglass Hut/Watch Station, said his company will use PeopleSoft 8 to support a company-wide departmental budgeting application.

Jeff Adams, director of customer service for Canadian Pacific Railway, predicted that PeopleSoft 8 will enable easier internal communications between headquarters and employees at the many local railway stations dotting the railway line.

Conway also maintained that during his first full year with PeopleSoft, he's made inroads on all of the goals he presented to users a year ago at PeopleSoft's 1999 users conference, including improvements in the areas of enterprise software, consulting, customer service, accountability, and customer satisfaction. But Conway acknowledged there's still room left for more progress on all these goals during 2001.

At a press conference later, Conway added a new goal. In 2001, he said, PeopleSoft will cut back spending on internal R&D, a level that reached 27 percent of all budgetary spending over the past year.

PeopleSoft will funnel some of these resources instead into executing marketing moves for PeopleSoft 8, a suite that entered limited availability in September.

Products and services announced this week include PeopleSoft 8 CRM; a set of Internet analytics for supply chain planning; a "Supply Chain in a Box" software bundle; PeopleSoft MarketPaly, an Internet-based financial settlement system for B2B trade exchanges; and new portals for both CRM and HR benefits, staffing and travel.

Some of the other executives at the conference talked about how PeopleSoft will use partnerships to help sell PeopleSoft 8.

Jeffrey J. Read, VP of worldwide marketing for PeopleSoft Consulting, noted that PeopleSoft announced another deal with IBM, for joint sales of its CRM software, a couple of months ago.

A source at IBM said the IBM/PeopleSoft HR deal might evolve into an IBM hosting scenario. But, he added, IBM will not discontinue an internally developed solution, dubbed HR Access, already being deployed in Europe.

Read foresaw an onslaught of other partnership deals for PeopleSoft over the year ahead, with large and small companies alike.

For one thing, PeopleSoft expects to team up with more of the big eight accounting firms, which have traditionally been customers for its financial software. In some cases, the accounting firms will act as ASPs, he said.

In another series of ASP plays, PeopleSoft is partnering with companies specializing in niche vertical markets like utility field service and high tech manufacturing.

PeopleSoft decided to adopt the vertical strategy based on market research about the applications favored for outsourcing by large vs. small customers, other sources said.

The research shows companies with revenues of $250 million and up leaning toward outsourced hosting of specialized applications. Companies below that threshold tend to contract with ASPs for generalized applications such as financials and HR.

PeopleSoft plans to reuse code from applications co-developed with vertical specialists, an activity that could help reduce R and D costs in and of itself.

PeopleSoft is now providing ASP services directly to about 25 customers. Another 180 customers are being supported through third-party ASP partners.

PeopleSoft currently services over 200 Asian clients on a retainer basis, the Kuala Lumpur Stock Exchange being one of them, said Rob Squires, general manager for Asia South.

Over 70 of those clients are in Singapore and include DBS Bank, the Port Authority of Singapore (PSA), Hewlett Packard, and Singapore Telecoms.

According to Squires, the focus of their offerings in the region lie in financials, customer relationship management, and materials management, with plans to triple profit in Asia within the next two years.

The company will announce and rollout the ASP services in Asia by November.

Additional reporting by Samuel Quek.

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