IBM not expecting Oracle-PeopleSoft impact

Exec says company has business around  both vendors; chatters pan presentation

STANFORD, CALIF. -- IBM does not expect to be impacted should Oracle succeed in its hostile bid to acquire PeopleSoft, Steve Mills, senior vice president and group executive for IBM's software group, said Wednesday at the AlwaysOn technology conference.

In addition to weighing in on the ongoing Oracle-PeopleSoft battle, Mills discussed IBM’s view on what is critical in the industry today, emphasizing the need to integrate systems. But conference attendees participating in an online chat being displayed on a screen simultaneous with Mills’ presentation expressed cynical remarks toward the executive.

Mills said Oracle’s planned acquisition would not change IBM’s view of the application market. The application market is a diverse, $100 billion market with thousands of companies. “Clearly, Oracle is not inclined to favor IBM Software in the market,” Mills said.

“Should that acquisition complete, we’ve got a large business around both companies that we expect to continue,” Mills said. Many customers use IBM’s WebSphere platform with an Oracle database, for example, he said.

“The fundamentals of the market are not going to change,” said Mills.

Consolidation is to be expected in the market, he said. “We’re going to see big players get bigger,” he said. IBM, in making acquisitions, leans toward companies with whom it has had a previous partnership, Mills said. He cited Wednesday’s announcement of its AlphaBlox acquisition and last year’s Rational purchase.

“There is a pattern of pre-existing relationships. We’re not just sort of out hunting for random companies to purchase,” Mills said.

Asked about the future of so-called best-of-breed software companies, Mills said the notion of best-of-breed was a euphemism. Many best-of-breed companies could not deliver on their promises, perhaps offering good functionality but lacking in scale and providing poor customer support. 

Mills began his discussion focusing on issues pertaining to system integration. Customers are looking for greater levels of integration, he said.

“They want to be laser-focused on applying IT effectively,” Mills said.

“In the IBM company, we’ve been talking to the notion of an on-demand business,” which enables users to change their IT systems to adapt to market conditions, he said.

An era of computing has emerged in which users are trying to federate different systems, applications, and assets, said Mills. “The shift toward a view of federated systems and integration is a driving force in the marketplace,” Mills said. He cited a market research figure in which 40 percent of IT spending is on integration.

He said the IT market today is “customer-led, not vendor-led,” with movements afoot such as open source.  Touching on security, Mills cited identity management as the biggest burden, with former employees or contractors still having system access after termination and able to do mischief.

Chatters, however, were aggravated with Mill’s remarks. Statements scrolled from an adjacent screen charging Mills was not saying anything new. “It’s the same talk you get from IBM Global Services after you pay for their services,” said one chatter.

After Mills touted IBM’s experience in middleware, a chatter said, “I cannot believe that in ’04 we are still actually talking about middleware. Give me a break.”

Regarding best-of-breed technologies, one chatter asked, “Why sell other people’s technology when you can sell them a $1M license and make it up with $7M in services to get something that is best of breed?”

Mills at one point said his biggest concern was his employees. “What I worry about most is what my people are doing everyday and whether or they’re being effective in getting their jobs done.” This line of discussion led one chatter to question how this attitude affects morale at IBM.

Another chatter pleaded for something not touched on in Mills talk: the OS/2 operating system. “Bring back OS2,” the chatter wrote.

Copyright © 2004 IDG Communications, Inc.

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