Chuck Phillips: The Face Of The PeopleSoft Takeover BidChuck Phillips: The Face Of The PeopleSoft Takeover Bid

In addressing the Oracle Applications User Group during the its conference in San Diego this week, Oracle executive VP Chuck Phillips joked that his decision earlier this year to leave his longtime post as software analyst for Morgan Stanley Dean Witter and become a key adviser to CEO Larry Ellison hasn't evolved quite as he expected. "After 17 years on Wall Street, I figured I'd take a more restful corporate job," he said. "My best-laid plans didn't work out."

Phillips has no one to blame but himself. As one of the most vocal proponents of the company's unsolicited bid to acquire rival PeopleSoft Inc., he has become the public face of the deal. Seemingly overnight, he's brought all of that expertise in crunching numbers, evaluating products, and analyzing deals to the forefront of his new role. And he's managed to be very convincing in doing so, all the while lending a softer exterior to a company that has been defined by his always-charismatic and often-unpredictable boss.

information senior editor Tony Kontzer was in San Diego, and he had a chance to talk with Phillips one on one just before the latter's on-stage appearance. Phillips provided insight into what customers are saying about the PeopleSoft bid, how it would impact product strategy, and why he thinks PeopleSoft CEO Craig Conway doesn't believe the deal will happen.

information: Craig Conway and many of PeopleSoft's customers are operating under the assumption that the acquisition is not going to happen. I saw some comments from Craig that he was no longer worried about a takeover as a possibility. Are they underestimating the potential for this to happen? What would cause them to think this?

Phillips: For someone who's not worried about it, he sure is commenting on it quite a bit. It's not up to Craig, which is kind of at the heart of this whole thing. He's the guy who's running the apartment and doesn't understand that the property owner owns the building. He doesn't own the building. If the shareholders want to sell it, they can sell it, and that's the bottom line. At this point, he's not on the critical path in the process. It's regulatory approval and then the shareholders. Part of that's wishful thinking and marketing, and that's fine. It doesn't affect the outcome. It's up to the regulators at this point. They're not reading that or worrying about that. They're doing their analysis, and that will drive the next inflection point one way or the other.

information: You've been having a series of town hall meetings with PeopleSoft customers. What have you been hearing from them at these meetings, and how do you appease their concerns about having to shift platforms if it came to that?

Phillips: Overwhelmingly, everyone I've talked to, once they hear our strategy directly from us, they're fine with it. I haven't had anyone who said they didn't understand the logic. They don't have to switch platforms, which is what they come to understand once they hear directly from us. They were told something other than that and were probably alarmed by PeopleSoft's management shortly after the announcement. But once we said, "No, that's not what we're planning to do. Here's the plan," and went through all of that, we not only had some good conversations, but it probably helped in a few cases to introduce us to customers we probably wouldn't have known otherwise.

We've had great conversations with a lot of the customers. They understand that we plan to support the product at least 10 years, if not longer, and that it's longer than PeopleSoft has committed to. Even though they extended their support, it's still not nearly as good as what Oracle is offering.

information: I actually talked to a consultant today who was very heartened by that and felt that was key to making this a deal that would be a win for both sides.

Phillips: Software companies rarely commit to 10 years for anything. So a 10-year commitment is a big deal to customers, especially in light of the fact that PeopleSoft has been charging customers to upgrade, so not being forced to migrate between releases and pay for it strikes at an issue that they're all familiar with. Most of the customers we talk to have been around a long time. They've seen mergers before. They understand business combinations are necessary and that it's probably good for the industry to have larger, more stable companies that can provide support. And if that's going to happen, they'd rather have a company like Oracle buying PeopleSoft than watch PeopleSoft struggle trying to integrate J.D. Edwards or get bought by someone else who would not make a 10-year commitment.

If you went to the customer base and asked everybody in the room to raise their hands if they work for a company that's never made an acquisition, there wouldn't be that many hands that went up except for the universities. So they understand that acquisitions are part of business, and probably healthy for the economy, and that there's a good reason to do them. It's not just for the heck of it.

information: Do you have any sense that, in terms of the Oracle customer base, there's any hesitancy, as they wait for this to play out, as to what they will commit money toward or whether something might come over in a PeopleSoft acquisition that would change their positions?

Phillips: We haven't sensed that at all. Our message has been clear to our own customers that this really doesn't affect you in any negative way. There's no reason not to move forward, and, if anything, it can only help you down the road. They're watching it with interest, but that's about it. It doesn't affect their decisions. We have joint customers, and joint customers are most likely to want this to happen because they'd love to have the single source of support for both of the products.