Oracle layoffs, changes worry PeopleSoft users

The company has announced plans to cut 5,000 workers

Oracle Corp.'s layoff and restructuring plans following the acquisition of PeopleSoft Inc. are raising concerns among PeopleSoft customers as the people they're used to working with vanish.

Since the $10.3 billion transaction closed earlier this month, Oracle has announced plans to lay off 5,000 employees, primarily from PeopleSoft (see story). And while Oracle executives assured customers that about 90% of PeopleSoft's support and development staff would remain in a bid to avoid service disruption, several users said this week that they're finding the transition somewhat problematic.

Of nine users interviewed, six are losing some of their PeopleSoft representatives; two others are in limbo, having had no contact from Oracle; and one is simply wary about the changes in general.

The loss of long-term PeopleSoft staffers was the most acute complaint. "We've found that the more our representative knows about us and the applications we are utilizing, the better the rep has served us," said Dave Richards, CIO and treasurer at Great Falls, Mont.-based Pacific Steel and Recycling.

The company runs PeopleSoft's EnterpriseOne ERP software and has just lost its account rep -- someone who had spent time at the company's headquarters to learn about the business and the software used. "When a new rep comes in, we will have to start this process all over again," Richards said.

"I don't know that this process can be made seamless, as knowledge of this kind is not easily transferable," he said. Richards went on to say that he hopes the replacement will at least have a strong grasp of EntepriseOne, be willing to learn about his company's operations and be thinking about his future software needs.

Richards isn't alone in facing disruption. After losing a key PeopleSoft marketing representative -- at the same time top PeopleSoft executives left -- Palmer, Alaska-based Matanuska Telephone Association Inc. put a planned upgrade from PeopleSoft World to EnterpriseOne on hold, said Gary Riley, business systems analyst.

The company is now "waiting for the smoke to clear and our executives to have a better comfort level," Riley said. "We are waiting when we need to be moving forward."

For other customers, their future with Oracle remains a question mark. At Agri Beef Co. in Boise, Idaho, about the only communications during the past month from Oracle are e-mails announcing "another farewell from another PeopleSoft friend," said Casey McMullen, director of information systems. "My in-box is full of, 'Farewell, it's been nice working with you' e-mails."

The beef supplier runs Enterprise financial applications, and McMullen said PeopleSoft had sent a team in to study his business before the implementation. That team even remained after the software went live. "Those people worked shoulder to shoulder with us and above and beyond the call of duty to forge a long-lasting business relationship that was a win-win for everyone. Now those people are pretty much all gone."

McMullen isn't sure that he will remain with Oracle support.

The decimation of PeopleSoft's upper echelon has been something of an issue at Denver-based staffing company Remy Corp., a PeopleSoft Enterprise customer. The departure of such highly placed PeopleSoft executives as President Phil Wilmington and Chief Financial Officer Kevin Parker has led to "a little bit of worry," said Andrew Albarelle, principal executive officer at Remy. He said his company had a "good, open relationship" with them.

Albarelle, who overall is upbeat about the merger, is waiting to be assigned a comparable executive sponsorship team from Oracle -- something he expects in the next month.

That customers are already seeing a personnel transition is no surprise, said analyst David Dobrin of Cambridge, Mass.-based consultancy B2B Analysts Inc. With an estimated 52% of PeopleSoft's employees fired -- many of them with customer-facing jobs in consulting or presales -- Dobrin doesn't know if Oracle can deliver on the promises of continued support to its new installed base.

The work those employees did helping "customers extract value from their applications" will remain undone, unless the customer turns to a third party or relies on internal resources. "Effectively, Oracle is shifting costs back onto the customer. It's hard to see how they'll like it," he said.

Copyright © 2005 IDG Communications, Inc.

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