Oracle Talks About Integration Effort That Will Determine PeopleSoft PayoffOracle Talks About Integration Effort That Will Determine PeopleSoft Payoff

Over the past few years, Oracle has been on one of the most aggressive shopping sprees the software industry has ever seen. The company may not be finished, but executives Monday paused to answer questions about Project Fusion, the crucial effort to combine the PeopleSoft, J.D. Edwards, and Retek technology it bought with Oracle's software.

The success of those deals hinges to a great extent on Oracle's ability to create an integrated suite of offerings to automate business processes and connect processes with back-end data. "Applications are becoming the most important business we have at Oracle," said Oracle senior VP John Wookey, who's leading the integration effort.

Oracle is expanding the ambition for Project Fusion. Since it was introduced in January as a blueprint for merging Oracle and PeopleSoft technologies, Project Fusion has grown to include middleware components that are designed to connect Oracle's recently acquired applications to the company's flagship database products.

Oracle knows tight-fisted, risk-averse companies will be reluctant to upgrade to the software suite that results from Project Fusion, even if they like the capabilities the applications offer. Wookey said the two most important questions customers ask are, can I afford to upgrade software this year? And, will all of this software work together?

For Oracle, one key to selling its strategy is making different pieces of the software package easy to deploy and integrate. "We expect that, as integration becomes transparent and seamless, risk will be reduced," said Dhrubo Sircar, senior VP and director of finance technology for Wachovia Corp., a customer of Oracle Financials as well as PeopleSoft HR. Sircar participated in a customer panel at Monday's event in New York. "I am personally very, very interested in where [Project Fusion] will go."

Pressures on the financial-services industry brought on by government regulations such as the Sarbanes-Oxley Act have made it crucial for IT departments in that industry to mitigate risk, Sircar said. "We are under incredible pressure to make sure our numbers are right," he said.

Oracle cranked up its acquisition strategy a few years ago in a move to close the gap between itself and SAP as a maker of enterprise applications. "We aim to get a return on that, and the only way to do that is to keep customers satisfied," Oracle president Charles Phillips said. When asked if Oracle would push customers to adopt Oracle databases, he said the company favors more of an integration approach of marrying Oracle applications and databases. But it's talking with user groups about it and would see if users put a value on being "database agnostic or want a more-integrated approach."

The major suites it's selling include its own E-Business Suite, PeopleSoft Enterprise, J.D. Edwards Enterprise One, J.D. Edwards World, and Retek's retail-industry applications. Oracle has pledged to support J.D. Edwards Enterprise One and World products through 2013. The company is extending J.D. Edwards Enterprise One Xe support through February 2007 for the current version and through June 2007 for version 8. This is consistent with the support promise that PeopleSoft made to J.D. Edwards customers after acquiring it, Phillips said.

Oracle will spend up to six months integrating its enterprise-resource-planning software with Retek's merchandizing software, Phillips said. The following six to nine months will be spent integrating Retek's software with PeopleSoft applications.

Additional acquisitions are possible, particularly of software vendors like Retek that cater to specific vertical markets. Markets of interest to Oracle are health care, banking, and the public sector, Phillips said.

But Phillips wouldn't comment directly on speculation that ailing customer-relationship-management vendor Siebel Systems Inc. is an acquisition target for Oracle. He said Siebel's asking price would be the key criteria in determining the feasibility of such an acquisition. The more Oracle expands, however, the harder it will be for some companies to turn down acquisition offers, Phillips said, contending that no software company wants "to be the guy that we didn't buy because then they have to compete with us," he said.

Oracle customers are quick to point out that just being bigger isn't enough. But if the integration is done right, consolidation can make for easier upgrades. "If there's anything we struggle with, it's planning and executing an upgrade," said John Carrow, CIO of Unisys Corp., a customer of Oracle 11i and PeopleSoft HR. Carrow said Oracle's acquisition of PeopleSoft helps his company's plans to expand use of both product lines. Carrow added with a smile, "Now, if you can work on Siebel."