PeopleSoft, IBM strike middleware alliance

PeopleSoft to optimize its applications for use with IBM's WebSphere

PeopleSoft Inc. is deepening its ties with IBM Corp., announcing on Tuesday a sales and development partnership it called the most significant enterprise applications alliance in the companies' history.

PeopleSoft will work with IBM to optimize its applications for use with IBM's WebSphere middleware and development tools, and will begin selling WebSphere products directly through its own sales force. The two companies will also jointly develop software packages aimed at customers in three industries: financial services, telecommunication, and insurance. PeopleSoft and IBM, already close partners, have worked together before on a number of development initiatives, but PeopleSoft executives said this agreement is their most far-reaching.

In his opening keynote at PeopleSoft's Connect user conference, PeopleSoft Chief Executive Officer Craig Conway lavished praise on IBM, calling it the company with "the most proven, trusted, tungsten-strength middleware." He also took the opportunity to blast SAP AG, whose applications compete with PeopleSoft's and whose new middleware platform vies with IBM's. SAP's NetWeaver middleware software is "young, largely acquired, and incomplete," Conway charged.

PeopleSoft and IBM will together invest $1 billion over the next five years in their joint activities, Conway said. Both will still remain flexible enough to serve customers using other applications or middleware foundations, he said: "Neither company has an ulterior motive. Both companies have been devoted to open architecture from the beginning."

PeopleSoft's move toward embracing IBM's middleware echoes one made by J.D. Edwards & Co. in 2002, before its acquisition by PeopleSoft. J.D. Edwards decided to standardize around IBM and integrate its middleware into its own applications.

The IBM deal is essentially a formalization of PeopleSoft's existing strategy, said Meta Group Inc. analyst Liz Roche. "To a certain extent, they had to announce something to compete with SAP's NetWeaver and Siebel (Systems Inc.)'s UAN (Universal Application Network)," she said. "I don't think this is market-changing."

PeopleSoft customers using other middleware for their infrastructure -- for example, software from Oracle Corp. or Microsoft Corp. -- will need to find out from PeopleSoft what this deal means to them, Roche said. She doesn't expect PeopleSoft to cut off customers on other platforms, but the IBM alliance could siphon off the resources available for supporting products from other vendors, Roche said.

One PeopleSoft applications customer running an Oracle/Microsoft Windows XP infrastructure, Agilent Technologies Inc. Americas HRIT Development Manager Andy Nallappan, said he still favors the IBM alliance because it could make it harder for Oracle to succeed in its bid for a hostile takeover of PeopleSoft.

Forrester Research Inc. analyst Paul Hamerman backed that view. "I think (PeopleSoft is) working toward a technology poison pill here," he said.

Hamerman sees the deal as a positive one for PeopleSoft. "I think it's a direction that they need to go in," he said. "They have been lagging behind SAP in terms of innovation on Web services."

AMF Bowling Worldwide Inc. Director of Information Systems Rohana Meade, a customer of both PeopleSoft and IBM, said she was pleased to hear about the alliance. "It only helps us," she said. "We use WebSphere, and we're an iSeries shop."

AMF Bowling, based in Mechanicsville, Virginia, is nearing the end of a multiyear, enterprise-wide roll-out of the EnterpriseOne product line PeopleSoft picked up from J.D. Edwards. AMF is also working on deploying IBM's WebSphere Portal for group collaboration, a project it expects to go live in December. So far, integration between IBM's software and PeopleSoft's has been going smoothly, Meade said.

Copyright © 2004 IDG Communications, Inc.

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