Ten Shekels and a (Hair) Shirt

Ten Shekels and a (Hair) Shirt

CIOs don't pay penance - they just pay and pay and pay . . .

If I were a CIO, I would resist spending money at all costs. My hands would stay firmly in my pockets for fear the moment I shook a few shekels loose, a crafty salesman would grab them and leave me with a pile of iron and software allegedly designed to create an organically-adaptive, agile, on-demand enterprise in real time.

I don't think I could take that much excitement in one project.

Many technology teams feel the same way about safeguarding their budgets but do not have the luxury of being able to stubbornly resist expenditure in an industry capable of delivering so much innovation so quickly. So, they deploy exhaustive and expensive efforts made to weed out the technology pretenders and make the right purchase. Government, especially agencies in Canberra, are expert in the dogma of due diligence.

For those on the receiving, it feels like death by due diligence. Agency IT and procurement gurus force vendors to spend literally hundreds of thousands of dollars to jump through commercial hoops of fire to win a lucrative contract. Sometimes, though, those flaming hoops are neither hot nor high enough to eliminate risk. Technology managers who write out cheques to PeopleSoft will know exactly what we're talking about.

PeopleSoft, a fabulous American outfit that specializes in enterprise applications, may soon be the latest unwilling member of an increasingly not-so-exclusive club of software firms to be eaten up by voracious opponents lusting after market share. The $US7.7 billion worth of lust for PeopleSoft belongs to Larry Ellison, founder and demigod of Oracle, arguably the most ambitious and combative software company on the planet; surpassing even Microsoft, which now tends to temper its behaviour after its PR disasters in the courtroom and on the security and pricing fronts.

The recent decision by US District Court judge Vaughn Walker to dismiss a US Justice Department bid to thwart Oracle's hostile takeover for anti-competitive reasons, is a tough turn of events not just for PeopleSoft but its loyal customers, too. Any CIO would be excused for buying and investing in PeopleSoft applications, believing the company would be here for the long haul. However, excuses do not resolve the issue of millions of IT investment dollars being wasted if Oracle gets its hands on its rival.

Oracle says it will support PeopleSoft for the next 10 years. However, customers can forget any notion of Ellison spending Oracle profits to build new applications for the PeopleSoft platforms, Enterprise, EnterpriseOne and World. By the time 2014 comes around, this technology will belong in the dark ages. And Oracle knows full well that a decade-long guarantee of support is not worth spit in the arena of business applications, which are deployed to increase efficiency and also drive competitive advantage. In the event of a takeover, this is the frightening prospect for the hundreds of Australian organizations and universities, which run PeopleSoft applications for activities such as HR, financials, customer relationship and supply chain management.

A sense of deja vu will also be felt by customers of the old manufacturing software company, JD Edwards, which was taken over by PeopleSoft in August 2003, sparking Oracle's hostility in the first place.

Most IT departments do not have the budget to play these vendor games of high finance and market domination, no matter how much it pleases the shareholders.

In all likelihood, Ellison launched the takeover to create uncertainty about PeopleSoft's future - a ploy that has been successful as it recently missed its own downgraded revenue forecast for the third quarter. The more Ellison thought about eliminating a competitor, the more he liked it. Which is all very amusing for him but certainly not for the customers, who struggle every day to meet business and technology demands with budgets strung so tight they twang like a guitar string.

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