PeopleSoft Picks IBM, Pokes Oracle

Undeterred by Oracle Corp.'s (Nasdaq: ORCL) hostile takeover bid, PeopleSoft Inc. (Nasdaq: PSFT) has forged a major alliance with IBM Corp. (NYSE: IBM) to combine the WebSphere platform with Peoplesofts applications (see PeopleSoft, IBM Announce Alliance).

The partnership, unveiled at PeopleSoft’s Connect user conference in San Francisco yesterday, comes less than two weeks after the Oracle bid received a boost from a U.S. District Court judge (see Oracle Prevails in Antitrust Lawsuit and PeopleSoft Comments on Court Ruling).

So far, however, PeopleSoft has resisted the bid, and the company has now teamed up with one of Oracle's biggest rivals. Under the terms of the IBM deal, reportedly worth $1 billion over five years, PeopleSoft will integrate IBM middleware and development tools into its portfolio of applications.

The two firms will initially target the banking, financial, insurance, and telecommunications sector with their joint offerings, which will be formalized sometime in the fourth quarter.

The move could be a shrewd one by PeopleSoft, particularly given the popularity of IBM’s WebSphere family of middleware products, which provides Web-enabled access to software applications.Sheryl Kingstone, program manager at Yankee Group, believes that data center managers who already have PeopleSoft applications on their servers could benefit from the deal. “It’s good news because the IBM WebSphere platform is extremely scaleable,” she says.

Scaleability and easy use are top priorities for IT managers, who typically run a wide variety of applications within their data centers. “The more control that you have over the entire infrastructure, the more control you have over total cost of ownership, migration, and upgrades,” says Kingstone.

So, is this a jab in the eye for Oracle? Not necessarily, according to Kingstone. “This is more about competing against SAP AG. There’s going to be a lot of companies vying with the complete [software] stack."

Certainly, SAP has been hard at work developing its own application server technology, and Microsoft Corp. (Nasdaq: MSFT) has also built up a sizeable middleware arsenal.

Nonetheless, the deal is still likely to antagonize Oracle, one of IBM’s major database competitors. When contacted by NDCF earlier today, a spokeswoman for Oracle declined to comment on the PeopleSoft/IBM alliance.Oracle, for its part, has already promised to support PeopleSoft products for at least ten years, should its bid prove successful. Kingstone warns PeopleSoft users to avoid making any knee-jerk purchasing decisions. “Don’t make any rash moves -- [the takeover bid] is still a very long, drawn-out process,” she says. “Sit tight and keep everything as vanilla as possible.”

— James Rogers, Site Editor, Next-gen Data Center Forum