Ellison: Partners Key to Merger Success

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REDWOOD SHORES, Calif. — Oracle CEO Larry Ellison said key
partnerships will help make the acquisition of PeopleSoft a complete success.

During an event at its corporate headquarters here, the outspoken
executive and his top executives introduced the newly merged company and discussed Oracle’s product and global support plans for PeopleSoft and J.D. Edwards application software.

Oracle has committed itself to supporting the PeopleSoft Enterprise, JD Edwards EnterpriseOne and JD Edwards World product lines through at least 2013.

“Everyone loses customers,” Ellison said during a press conference. “Oracle’s [customer] retention rate is currently 95 percent and our
‘worst case scenario’ models show PeopleSoft’s product retention rate is
about 95 percent.”

Ellison noted that major PeopleSoft customers such as General Motors and HP would more than likely keep their contracts in
place. But he also said Oracle would prepare for worse case scenarios
of 85 percent customer retention rates. If enough customers were to drop to such a rate, it would have triggered even more layoffs than the 5,000 that hit Oracle and PeopleSoft staff over the weekend, Ellison said.

He also said one of the biggest changes will be
building Oracle’s relationship with IBM and Accenture .

“The two largest players in the global services space are IBM Global
Services and Accenture,” Ellison said. “Though IBM has worked with us
for a long time, they do a lot of implementations of Oracle and
therefore our relationship becomes more important. We will also deepen
our relationships with partners like Accenture.”

Ellison said IBM and Accenture along with Oracle’s channel partners
and other global service providers have a unique opportunity to help sell three different product lines — Oracle, PeopleSoft, JD Edwards — all of which puts money in Oracle’s pocket.

“The merger of PeopleSoft and JD Edwards is turning out to be a much
more channel-operated company for us,” Ellison said. “But ultimately,
that means more channels selling Oracle.”

So far, Oracle has reached out to more than 4,500 PeopleSoft and J.D.
Edwards customers as a sign of support. Ellison said customers should be
encouraged that Oracle is keeping 90 percent of the PeopleSoft
development team and support services teams.

“The message is obviously to keep customers at all cost,” Joshua
Greenbaum, a principal analyst with Enterprise Applications Consulting,
told internetnews.com. “What will be interesting to see now is
how well they execute the contracts since everyone will have to review
their contracts with Oracle.”

Ellison also seemed unfazed by the magnitude of the task ahead for
Oracle. Instead he cited the combined organization of Oracle and
PeopleSoft consists of more than 6,000 support staff in 16 global
support centers and more than 1,300 Oracle and PeopleSoft applications
partners.

The partnerships are also important, said Ellison as Oracle readies
itself to take on all comers in the enterprise application market
including Microsoft and SAP .

“We’re not that worried about Microsoft because its business services
is aimed at the lower markets,” Ellison said. “We’re concerned with them
in Europe more than in North America. They are not strong in
manufacturing and they are not strong in HMRS.”

Likewise, Ellison dismissed market leader SAP, who he noted is trying
to build up its mid-market software based on its recently released
NetWeaver software.

Ellison said Oracle has had success in U.S. in the mid-market against
SAP, which has very good margins in Germany, Austria and Switzerland.

Additionally, to help disrupt the market, Ellison said that Oracle
would publish PeopleSoft’s previously hidden fee structures and either drop maintenance fees or at least keep them the same to lock in
customers into their current contracts.

Ellison said Oracle would more than likely develop its own “software
on demand” product in the same vein as Salesforce.com and NetSuite.

“If not a major portion of our future products, certainly it will be a
huge portion of them,” Ellison said.