Sidebar: Acquisition's Long-Term Effect Is Still an Open Question, Analysts Say

By Marc L. Songini

August 20, 2004 12:00 PM ET

Computerworld - It remains unclear just what the long-term effects of PeopleSoft Inc.'s buyout of J.D. Edwards & Co. will be on the company itself and the business applications market as a whole, analysts said last week.
One year after it acquired J.D. Edwards, PeopleSoft arguably is a stronger competitor to ERP rivals SAP AG and Oracle Corp., said Jim Shepherd, an analyst at AMR Research Inc. in Boston. But at the same time, PeopleSoft has a cloud hanging over its head because of Oracle's ongoing hostile takeover bid, according to Shepherd. "On balance, it's probably a wash," he said.
In terms of how the buyout has affected the applications market, Shepherd said he thinks that the deal has helped to make customers nervous about investing in new applications. He noted that if PeopleSoft could acquire a company like J.D. Edwards, with its large customer base, "anybody could be bought."
As a result, some IT managers who are evaluating ERP applications will be more concerned about the size and long-term viability of prospective vendors than they might have been in the past, Shepherd said.
The fallout from the acquisition is hard to assess because of the unpredictability caused by Oracle's attempt to buy PeopleSoft, said Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Berkeley, Calif. He noted that more than a year after Oracle launched its bid, the outcome is still far from certain. That has helped solidify SAP's position as the ERP market leader and as the "safe bet and sane choice," Greenbaum said.
"A year is almost too early to pass judgment on whether or not this [acquisition] made sense," said John Moore at ARC Advisory Group Inc. in Dedham, Mass. So far, it hasn't changed the way that application vendors do business, Moore said, adding that consolidation "is just a natural evolution of the market."

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