Why You Should (Still) Pay Attention to the DOJ-Oracle Trial

By Lisa Vaas  |  Posted 2004-06-07 Email Print this article Print
 
 
 
 
 
 
 

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Microsoft's admission that it tried to merge with SAP is just a taste of how much juicier the tale will get now that the two parties are finally in court.

The Oracle-PeopleSoft-DOJ saga is similar to water torture. It just keeps dribbling on, only getting to trial in San Francisco federal court this week.

Every drip of news over the past 12 months has been of incremental interest to attorneys and to journalists, who are still driven to writing about every twitch in Judge Vaughn Walker's eyelids because we know that God is keeping score of how many words we write and won't let us into heaven if we miss something.

Enterprise customers, meanwhile, have been the recipients of the constant drip-drip-drip of news and the diverted attention of their software vendors.

As Renee Boucher Ferguson wrote in an article that sums up what will happen in court this week and how the industry has been affected so far by Oracle's hostile takeover bid for PeopleSoft, customers are fed up with this dragging-out of the story.

For example, Mike TenEyck, manager of administrative information systems at Texas Christian University, in Fort Worth, has an attitude that's representative of a majority of enterprise customers.

TenEyck told Ferguson that this type of debacle is just a distraction that takes PeopleSoft "a lot of work, time and money" to fight off. That's work, time and money that the company could be putting into making better products, of course.

Rouse yourself from the enervation caused by the Oracle-PeopleSoft saga, though, because we're finally at the point where it really gets interesting.

Microsoft's and SAP's admission Monday that Microsoft last year talked with SAP about a possible acquisition is just the first taste of the fascinating—and useful—insights into the acts of software giants we'll be gleaning during this trial.

Next page: The Microsoft-SAP deal is a harbinger of the market intelligence that will pour from the trial.

Microsoft's coy denial of being interested in moving upmarket in the enterprise software market has always been comically implausible.

Back in March, the company provided the DOJ with a sworn statement to the effect that it has no plans to enter the enterprise market within the next two years.

Oh, puh-leaze. The disclosure about the SAP deal only confirms what most of us have always assumed: namely, that a company that goes out and buys two enterprise application companies (Great Plains and Navision) and which has pledged to invest the enormous sum of $10 billion in R&D into this space over the next five years has every intention of taking the enterprise software market by storm.

Click here to read more about Microsoft's acquisition of Navision.

Oracle will put Microsoft's Cindy Bates on the stand as its 18th witness out of 25 this week. Antitrust experts expect Oracle to paint Microsoft as a strong competitor in the enterprise market.

As Paul Friedman, a Washington, D.C.-based partner at law firm Dechert LLP, told me, "Oracle hopes to show that Microsoft has very ambitious plans to participate in that space and, frankly, has substantial business imperatives to be successful in that space."

Microsoft will likely contend that just because it was interested in SAP doesn't mean that it was interested in entering the high-end enterprise space.

As Friedman pointed out, there's more to SAP than high-end software. "It begs the question," Friedman said. "[Microsoft was trying] to enter which market?" Indeed, what would Microsoft have bought if it acquired SAP?

Next page: Microsoft needed SAP to cure its scalability and sales problems.

But SAP's high-end software just makes too much sense for a Microsoft acquisition to be about much else. Paul Hamerman, an analyst at Forrester, in Cambridge, Mass., said the Great Plains and Navision products that now fall under Microsoft's Business Solutions, with the exception of ERP (enterprise resource planning) product Axapta, are unsuitable for the enterprise because they just don't scale—mainly because they're client-server products that weren't designed to scale to hundreds of users over a network.

"I think Microsoft is looking at the Axapta product and looking to make enhancements from a functional standpoint and improve the scalability of that product in hopes of winning business in the upper end of the market," Hamerman told me.

An SAP acquisition would have helped Microsoft solve the scalability and functionality deficits its MBS tools now suffer.

It also would have helped Microsoft leap another serious barrier to the high-end enterprise market: namely, the fact that its entire sales model is indirect and its products are sold through resellers and channel partners.

"That channel's good for the midmarket, but they don't have a direct sales model," Hamerman told me. "The SAP merger would be a way to do it," he said, albeit an expensive one.

Microsoft has been fine-tuning its Microsoft Business Solutions products, of which Great Plains is now part. Click here to read more.

What does this all mean to you? It means that Microsoft is on track to offer you another option when it comes time to purchase or update financial or human resources software.

It means that at some point, you will have more sway with vendors during the purchasing process, because you'll have one more competitor to hold over their heads. It means that you should pay attention to what Microsoft says when it's on the witness stand.

Next page: We'll glean good info on sales tactics, too.

Hamerman had some other good suggestions for what we should pay attention to in the trial. In general, customers will be able to garner valuable insight into software sales tactics, which will be revealed to some extent in this trial.

For example, there's been a good amount of sales documentation gathered regarding Oracle's habit of offering steep discounts to customers, particularly when those customers are favoring other vendors. That will certainly be of interest to customers who are in the process of buying software, Hamerman noted.

There also will be a slew of case studies offered during the trial. Also on the stand will be systems integrators. There's bound to be loads of useful information about the experiences customers have had in selecting and deploying complex applications, Hamerman suggested.

In the end, will the trial's outcome matter? If the DOJ wins, it won't eliminate industry consolidation. As eWEEK's Ferguson pointed out in the article I referenced earlier, damage has already been done in the form of PeopleSoft personnel who've been diverted so as to fight the lawsuit, as well as lost J.D. Edwards staffers.

But regardless of the outcome, the process, as we're already witnessing, is going to provide us all with a wealth of information that you can put to use in purchasing decisions and sales negotiations. So, whatever you do, don't change that dial—stay tuned to the Oracle trial.

Please register for TalkBack below and tell me and other readers what you think, or write to me at lisa_vaas@comcast.net.

eWEEK.com Associate Editor Lisa Vaas has written about enterprise applications since 1997.

Check out eWEEK.com's Database Center at http://database.eweek.com for the latest database news, reviews and analysis.

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Lisa Vaas is News Editor/Operations for eWEEK.com and also serves as editor of the Database topic center. Since 1995, she has also been a Webcast news show anchorperson and a reporter covering the IT industry. She has focused on customer relationship management technology, IT salaries and careers, effects of the H1-B visa on the technology workforce, wireless technology, security, and, most recently, databases and the technologies that touch upon them. Her articles have appeared in eWEEK's print edition, on eWEEK.com, and in the startup IT magazine PC Connection. Prior to becoming a journalist, Vaas experienced an array of eye-opening careers, including driving a cab in Boston, photographing cranky babies in shopping malls, selling cameras, typography and computer training. She stopped a hair short of finishing an M.A. in English at the University of Massachusetts in Boston. She earned a B.S. in Communications from Emerson College. She runs two open-mic reading series in Boston and currently keeps bees in her home in Mashpee, Mass.
 
 
 
 
 
























 
 
 
 
 
 

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