Feds unnerved by Oracle/PeopleSoft fight

While the Justice Department scrutinizes Oracle Corp.'s efforts to take over rival PeopleSoft Inc., the two companies continue maneuvering.

Late last week, Oracle extended its offer, originally due to expire July 7, to July 18.

But federal PeopleSoft users are wondering if they should buy more of the company's software or wait until the hostile takeover bid is resolved. Although Oracle has pledged long-term support for the latest PeopleSoft products, users will ultimately have to switch to Oracle's e-business products in order to upgrade, Oracle officials have said.

Both companies make competing enterprise management software suites for virtually all aspects of business management, including human resources, sales, customer support and finances. Oracle is best known as a database developer, however.

Oracle's database is common, but PeopleSoft's management applications are widespread in government, said Hans Heidenreich, project director of the Agriculture Department's Internet Combined Administrative Management System and chairman of a federal PeopleSoft user group.

"If we had to convert, that would be a major undertaking," he said. "We'll just have to roll with the punches."

The USDA's system is based on PeopleSoft's Human Resources Management System Version 8, the latest incarnation of its HR suite, Heidenreich said. It covers about 40 percent of the agency and will ultimately expand to include the rest.

"I would say the majority of agencies are using some form of PeopleSoft," he said. "I would say it's very close to a standard."

Oracle should not count on PeopleSoft users happily switching to the rival company, he added. "I think if this actually happened, we would just continue to maintain [the software] we've got using the support services we've got," he said. "Then, after the life cycle is over, we'd recompete."

"From my experience regarding any conversion to a different product, there is a lot of work involved," said Judy Burnam, deputy chief information officer at the Federal Trade Commission, in an e-mail message. The FTC is considering implementing PeopleSoft's customer relationship management system to replace another system that PeopleSoft acquired a few years ago and is discontinuing, she said.

Other users in the group were ready to upgrade their PeopleSoft installations when the takeover attempt was initiated early last month, Heidenreich said. Now, "they're wondering if they should or not."

Justice officials requested more information last week from the companies as agency officials determine whether Oracle's bid would violate antitrust laws.