Q&A: J.D. Edwards' CEO Sees 2 Compatible CulturesQ&A: J.D. Edwards' CEO Sees 2 Compatible Cultures

J.D. Edwards & Co.'s chairman, president, and CEO, Bob Dutkowsky, is widely credited with helping the company turn its business around. information news editor Beth Bacheldor discussed with him how things will change and what users can expect now that PeopleSoft Inc. plans to acquire the company.

information: Why do this now?

Dutkowsky: We had six quarters in a row of profitability where we beat Wall Street's expectations, so we think the time to make big moves is when you are moving upward, not moving downward. Secondly, we started with building a strategic plan last fall, and we looked at a broad array of alternatives: whether we should make some acquisitions, whether we should be acquired, whether we should move into some different verticals, whether we should build some new products. And we came down to the alternative that one of the very best opportunities for J.D. Edwards would be to merge with PeopleSoft. At the same time, PeopleSoft was independently doing their own strategic planning, and they came up with the alternative that they should merge with J.D. Edwards. So when Craig Conway and I first spoke about the opportunity, all the work had kind of been done in the background, and it was just logical for us to come together. So we spent the last eight months or so validating that what we saw was correct and that PeopleSoft was really what we thought it was and that this transaction made sense to our shareholders and all of those tests were met, so that's why our board decided to move now.

information: How will the two companies cultures' mesh?

Dutkowsky: Both of us are mature software companies. We're not startups that have been around for just a couple of years, so yes, we do have entrenched cultures inside each of our companies. But those cultures are built around caring for the customer and caring for the employee, and that's in our fabric. I like to say that's in our DNA, and I believe after all the time I've spent with the PeopleSoft folks that it's in their fabric and DNA as well. I think that will allow us to put the two companies together relatively easy. Usually, technology-company mergers have a problem because the technologies don't work together or the people don't work together. We have already seen over the last few months of our due-diligence process that our two organizations and the cultures can work together and work together effectively, and we're confident the technologies are going to come together to the advantage of our customers.

information: What about product overlap?

Dutkowsky: The enterprise-services sector focus that PeopleSoft has and the midmarket manufacturing-distribution focus that J.D. Edwards has are the vast majority of each or our businesses. So when you intersect those two businesses, the overlap is far outweighed by the leverage that exists. Let me give you an example. Our customers are asking us for sourcing and E-procurement applications to enhance their supply-chain execution. We don't have those set of offerings today. And so part of our planning process was we are going to have to build or buy those sourcing capabilities. We are going to have to build or buy the E-procurement applications. Now our customers will have that capability because PeopleSoft already has it. PeopleSoft, on the other hand, was trying to look at how to get enterprise asset-management applications and advanced planning and optimization into their customers' hands, and they were thinking of building it or buying it. Now they have it. Those are areas where there is no overlap whatsoever, just pure opportunity to better serve our unique marketplaces and our unique customers.

The way that I look at it is that PeopleSoft going forward will have three different product sets. They'll have a set of products that are targeted at the high-end enterprise, and those will be the historical PeopleSoft products. They'll have a set of products targeted at the midmarket, and those'll be the J.D. Edwards products historically, and then there's the AS/400 market that J.D. Edwards has served so successfully for so long. And those three product lines will have product road maps and life spans, but each of those customers will be able to buy from the other product lines.

Over time I think you can anticipate those products will come closer together. If you look at the definition of the J.D. Edwards midmarket products, their strength is the level of integration that they have, and if you look at the PeopleSoft enterprise products, they're not nearly as integrated. And so think of it this way: PeopleSoft will learn the magic formula that J.D. Edwards has for integration, and J.D. Edwards will learn the magic formula that PeopleSoft has for modularity, and both product sets will emerge over time with those strengths, and the customers will realize the advantages.

We have webMethods as an offering underneath the J.D. Edwards 5 family, and the J.D. Edwards 5 family is all supported by WebSphere. There's another example of a common development platform, a middleware platform that our customers can bridge off of either direction.

information: What about AS/400 apps? Will there be a time when that line will be dropped?

Dutkowsky: I don't anticipate that PeopleSoft will abandon that customer set. And the reference I give you is when PeopleSoft bought Vantive a couple of years ago--they continue to support the back-level versions of the Vantive product. They have a history like us of taking care of customers. There are over 4,000 AS/400 customers in J.D. Edwards, and they are an important part of the J.D. Edwards' product life, they are an important part of our strategy, they're an important part of the profitability model of the company. There's no way in the world that PeopleSoft wants to see anything bad happen to the AS/400 market or the customers.

information: What will you say next week at J.D. Edwards' user conference to ease customers' concerns?

Dutkowsky: I think customers do look at these transitions, and there's a long history of them not going well, but generally when they don't go well it's this point in time when you hear CEOs talking about smashing product lines together and eliminating products to get cost savings so they can make the deal work. That's not the strategy here. We have three product lines, all three product lines are profitable. We have the opportunity to show our customers that we are only going to strengthen the product sets that we bring to them. We are only going to make them more appealing and more compelling for the customers.

I can assure you, we would not have done this if we didn't think our customers would benefit. It would be against our culture to do something otherwise.