A majority of SearchCRM.com readers think that, if Oracle Corp. succeeds in acquiring rival PeopleSoft Inc., the move would ultimately hurt business applications users, according to an exclusive survey.
Six out of every 10 respondents said the deal would not be good for PeopleSoft's current customers. Fifty-four percent said that less competition in the CRM market would hike costs, and 51% said it would reduce overall software quality.
Overall, more than 450 people took the online survey, which was launched June 6 -- the day Redwood Shores, Calif.-based Oracle announced its hostile takeover bid for PeopleSoft, Pleasanton, Calif. Oracle is currently waiting for PeopleSoft shareholders to weigh in on its offer, which it recently upped to $6.3 billion, or $19.50 per share.
Among the respondents, 55% said they currently have a significant application investment with Oracle, 28% identified themselves as PeopleSoft customers, 30% do business with SAP AG and 20% run Siebel Systems Inc.'s applications.
Patrick Harris, IT manager at Sealing Devices Inc., in Lancaster, N.Y., recently wrapped up an ERP and CRM implementation and considered PeopleSoft software before opting for Oracle. He expects market consolidation ultimately to ease integration with suppliers and partners by causing shops to standardize on a handful of platforms.
"It strengthens Oracle's position in the marketplace. From a selfish perspective, we made the right decision," Harris said. "I would not feel the same way as a PeopleSoft customer, though."
In fact, only 25% of those surveyed said the Oracle acquisition would benefit PeopleSoft CRM users. Fifty-two percent said the deal would be good for shops running Oracle CRM. Oracle has said that it would eventually discontinue PeopleSoft's product line. It hasn't said whether it would continue with PeopleSoft's planned merger with midmarket provider J.D. Edwards & Co., Denver.
"PeopleSoft users are definitely concerned that, down the road, they're going to lose support," said Steve Bonadio, senior program director at Stamford, Conn.-based Meta Group. "And the consensus is that, if Oracle succeeds, it won't want to take on J.D. Edwards, which is disappointing to those users because I think they saw [an] upside to the merger with PeopleSoft."
Bonadio said the proposed Oracle-PeopleSoft deal is a greater threat to ERP customers than to CRM customers.
"The elimination of PeopleSoft really limits the choice of tier-one ERP vendors to Oracle and SAP," he said. "I don't necessarily see this as throwing a monkey wrench in the CRM industry."
Looking forward, the survey did not offer a clear sign as to how the acquisition would impact Oracle's effort to attract customers. Forty-three percent said they would neither be more nor less likely to buy software from the vendor if the bid is accepted, while 31% reported that they would be more likely to buy software from Oracle and 26% said they would be less likely to do so.
Bonnie Stribley, sales force automation manager at Forest Laboratories Inc., in New York, is currently running software from pharmaceutical specialist Dendrite International Inc., but she is considering other options from other vendors. She thinks consolidation ultimately hurts the user.
"It limits our choices," she said. "That's the hardest thing."
Only 26% of respondents said the deal would improve overall product quality by making Oracle a stronger competitor.
Bonadio believes that the elimination of PeopleSoft from the CRM market would encourage users to make buying decisions based more on quality of technology, as opposed to the long-term viability of a particular vendor. He said that, if a heavyweight like PeopleSoft can be bought, vendor viability may be less of an issue plaguing smaller providers.
"I think this opens some new options to users, in terms of considering smaller players with best-in-class technology," Bonadio said. "Companies like Kana, Unica, Onyx or Pivotal could actually benefit from the consolidation among the larger players."
Bonadio said he did not feel the merger would drive up CRM applications pricing, at least not in the near future.
Scott Nelson, a vice president at Gartner Inc., in Stamford, Conn., prefaced any comment on the potential acquisition by saying he does not think it will win shareholder approval.
Nelson agreed that the deal would hurt PeopleSoft users most and said he feels the reduced number of enterprise vendors would negatively impact the CRM market overall. However, he agreed that the deal could create some opportunity for smaller vendors to fill the void left by PeopleSoft.
"We've already seen this happen to some extent over the past few years, as Siebel's grip on the market has been weakened," Nelson said. "In the short term, there will most likely be a negative impact but, long term, there may be some good here for vendors outside the enterprise space."
Nelson's greatest concern is that uncertainty touched off by the Oracle bid may put off renewed growth of the CRM market, which he had begun to see taking shape.
"Certainly, this will cause many CRM buyers to put spending back on hold, and we had begun to see things improving, so that could be the worst part of all this," Nelson said.
News editor Jon Panker contributed to this report.
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