James Governor's Monkchips

On Keeping Oracle At Bay: IBM+PSFT

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First off I believe that the IBM PeopleSoft partnership was always going to play out a lot like this–see my blog of June last year.

You could argue the Oracle bid for PeopleSoft, and subsequent case against the DoJ, just postponed this approach, taking Peoplesoft’s eye off the IBM Partnership ball. It was in reactive mode after all.

Whats interesting is that this kind of deep substantive partnership and announcement could have been made at any time…. With or without the oracle case against the DoJ.

I believe the DoJ’s case was always somewhat absurd–it made a similar ruling against Compuware in the 1999 time frame that was based on absurdly blunt policy instruments. The US DoJ seems to have lost any capability or credibility. Come on guys you can’t do your job if you don’t know how to define a market. It’s the ecosystem stupid.

We can safely assume that PeopleSoft is going to do everything in its power to encourage customers off of the Oracle database. We can also assume IBM and PeopleSoft are now working together to establish financial instruments and poison pills to stop Oracle if they can–there will be something contractual coming up–thus “The companies intend to execute a definitive agreement governing the alliance in Q4 2004.”, a statement which looks for shorthand to say there is far more to this than a “partnership”

For now IBM will use PeopleSoft as a semi-permeable membrane allowing Big Blue to make application functionality sales to end users without raising the hackles of its other business application partners. IBM says it has no plans to enter the application marketplace, but that is just a definition–the kind that might fool the DoJ but not Oracle or SAP.

The fact is IBM was always going to deliver business process components within a middleware framework – kind of like a negative image of SAP, which is moving from monolithic apps that don’t talk to one another, let alone other apps, to an integration centric vision called Netweaver.

The risk factors associated with allowing PeopleSoft to fall into Oracle’s hands are just too great (see my june 03 above) for IBM not to get involved as a “hands off white knight”. But it has a delicate game to play with its channel partners. It has to keep saying it doesnt sell apps.

All in all though, from an enterprise customer point of view, I think PeopleSoft and JD Edwards customers will be pleased to see this IBM announcement. Nobody likes being told their software choices are now defunct. The announcement he made early on that Oracle would kill PeopleSoft’s products, and only support Oracle databases may yet come to haunt Larry Ellison. Round one was DoJ. Round two is fighting the market – IBM and PeopleSoft and many customers. On recent evidence it is harder to fight the market than it is the DoJ. Just look at Microsoft’s recent 10k and its Linux fears…

For IBM the balancing act is getting harder. SAP meanwhile is watching and waiting.

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