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Things to Come

What does Oracle's acquisition of PeopleSoft mean for insurance?

As its moniker suggests, Oracle (Redwood Shores, Calif.) has spent recent weeks offering prophetic responses to the concerns of PeopleSoft (Pleasanton, Calif.) partners, employees and customers as a result of Oracle's $10.3 billion acquisition of PeopleSoft, which was announced Dec. 13.

The sale was approved by both companies' boards of directors and (at press time) is expected to close in January. The combined company would be the world's second largest enterprise application provider, after SAP (Waldorf, Germany). Oracle has promised to continue to support PeopleSoft products, including Enterprise Version 8, until 2013, and to develop a subsequent version of both the Enterprise and EnterpriseOne product lines.

In September, one week before PeopleSoft chairman and CEO Craig Conway was fired, IBM (Armonk, N.Y.) and PeopleSoft announced an alliance that would standardize PeopleSoft's applications on the IBM middleware platform. But that deal was quickly eclipsed. "We don't have a lot of detail on the IBM contract, if there is one," said Oracle copresident Charles Phillips in a teleconference on Dec. 14. "We aren't that interested in adding more IBM technology to the stack, but we are very interested in working with them on the consulting side to make sure they are aware of Oracle products and services, and to build a better partnership with them." According to Phillips, Oracle has no plans to sell off the IBM i-series-based product line and will support customers running IBM DB2, Microsoft SQL Server and other databases with the PeopleSoft product line.

A new product set is in the works that will use Oracle products and infrastructure as a foundation and will incorporate features of both companies' products. The new product set will be based on Java open standards. But, it will be the customer's choice to upgrade through the exchange of existing Enterprise, EnterpriseOne and World Software licenses for equivalent Oracle licenses. "Over time, the plan is to continue to enhance the PeopleSoft product line and eventually migrate into an Oracle product with PeopleSoft technology," said Phillips.

But that plan presumes that current PeopleSoft customers will not seek an alternative. "I don't believe that there is an uptick in application spending, which is part of the reason the market is consolidating. So, as far as maintenance, we have to deliver good service, and we're spending a lot of time on that so as not to give people a reason to look elsewhere," said Phillips. As expected, though, some PeopleSoft employees will need to look elsewhere. "Our emphasis is in keeping developers and support workers," he noted.

The acquisition is part of Oracle's plan to increase critical mass in the financial services market, Phillips said. "We will fund more features development in the financial services vertical, making it even more of a strategic move than it was before," he explained.

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