As PeopleSoft, Inc. CEO Craig Conway expressed disgust at Oracle Corp.'s attempted hostile takeover of his company, SAP disputed predictions that the deal poses a threat to its number-one position.
Indeed, SAP spokesman Bill Wohl said that the German software company expected it could benefit from any possible merger for a simple reason: one enemy is easier to combat than two.
"If it were to happen," Wohl said, "then it would certainly make the market easier for us to track. It would allow us to focus more strongly in one direction."
SAP's stock jumped 12% last week, to its highest level in a year, as investors responded to the surprise announcement made by Oracle CEO Larry Ellison Friday morning. Ellison's bid to buy PeopleSoft for about $5.1 billion followed another startling announcement earlier in the week when PeopleSoft said it would buy smaller rival J.D. Edwards & Co. for $1.7 billion.
In a statement released Friday, PeopleSoft's Conway blasted Oracle's offer, calling it a "transparent attempt to disrupt the acquisition of J.D. Edwards by PeopleSoft."
J.D. Edwards Chairman and CEO Bob Dutkowsky echoed Conway, releasing a statement predicting Oracle's plan will greatly reduce options for business software customers and possibly violate U.S. and European antitrust laws.
Many users and analysts agreed. "I think that Oracle was backed into a corner by the earlier announcement from PeopleSoft, " said David. W. Stupar, a SAP customer and manager of information services at New Jersey's Ocean County Utilities Authority.
"It was time for them to either make a move or acknowledge that they were going to remain a minor player in the enterprise application market space," Stupar said. " I also think that the whole thing might still blow up as there are many large egos at play and some significant antitrust law challenges to overcome before the mergers happen."
Although Ellison told analysts who attended a Friday morning conference call that Conway had approached him about joining forces, Ellison's current offer was unsolicited. Conway called it "atrociously bad behavior from a company with a history of atrociously bad behavior."
If Ellison didn't offend the rest of the IT industry Friday, then he did succeed in shocking them.
"Utter shock and disbelief," was the reaction from Joshua Greenbaum, principal analyst at Daly City, Calf.-based Enterprise Applications Consulting. Greenbaum echoed many analysts when he described the possible consolidation as a "major threat" to SAP.
Still, Greenbaum said, the problem SAP competitors have always had is finding a way to challenge SAP' s installed base, which represents more than half the total enterprise software market.
"There's just no way around that," Greenbaum said. "And it's why SAP is so far ahead in this market."
Ellison, though, is clearly targeting SAP, and has predicted that his company and SAP would be the last two standing in the business software market.
It's unclear how much of an impact the consolidation would have on existing customers. Ellison has said he would support PeopleSoft's existing customers and eventually move them to newer versions of Oracle applications.
"I do not expect a big change for the immediate future because we have a legal agreement that PeopleSoft or its assignees have to continue to support our current product for four years," said Ken Nash, manager of customer information systems, Trane Commercial Systems, a manufacturer of air conditioning systems.
Like many customers, Nash's IT division will continue with the plans it made prior to the rush of acquisition announcements last week. "We will proceed with our upgrade from CRM 8.4 to 8.8 later this year," Nash said.
SAP will also continue on its charted course, Wohl said, setting its sights on the company's upcoming user event, Sapphire, taking place in Orlando this month.
"We are the safe, stable provider in this market," Wohl said. " We're focused on our customers, while other people might be putting their energies into gaining market share."
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