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A 'Plan B' for PeopleSoft customers

With an Oracle buyout looking likely, software-maintenance start-up TomorrowNow's phone is ringing off the hook.

Software maker SAP isn't the only company expecting to profit from a drawn-out takeover fight between rivals Oracle and PeopleSoft.

TomorrowNow, a Texas start-up specializing in software maintenance services for PeopleSoft customers, says its phones have been ringing off the hook ever since a recent court ruling gave Oracle permission to continue its hostile pursuit of PeopleSoft.

"There's a lot of chaos and confusion," said Seth Ravin, president of TomorrowNow. "We've become more of a safe harbor."

It's a familiar refrain. Germany's SAP, which competes with Oracle and PeopleSoft in the market for business management software, says it's winning customer contracts over PeopleSoft because of concern about PeopleSoft's future.

Ravin, a former PeopleSoft customer service executive, hopes to cherry-pick a few new clients at a PeopleSoft convention that commenced Monday in San Francisco. He figures his message will resonate with thousands of PeopleSoft customers streaming into town for the conference.

The message is this: TomorrowNow promises to cut the maintenance and support bill for PeopleSoft's applications in half and give customers a reprieve from the software supplier's tiresome upgrade cycles. Based on that promise alone, the company has signed up 65 customers. Among its clients are some major corporations, including Electronic Data Systems, Lockheed Martin, Safeway, Coors Brewing, Circuit City and Petco.

Now the 31-person TomorrowNow has an extra selling point. In the event of an Oracle buyout--a high possibility in the wake of its antitrust victory--TomorrowNow will keep up the basic care and feeding of PeopleSoft customers if Oracle falls down on the job, Ravin said. He and TomorrowNow Chief Executive Andrew Nelson plan to host a series of executive briefings on Thursday at a hotel near the PeopleSoft convention to drive this point home.

"The Oracle situation has no impact on our customers at all today because they no longer rely on PeopleSoft for maintenance," Ravin said.

However, conference-goers shouldn't expect to hear a lot about the service from PeopleSoft itself. That's because TomorrowNow siphons off a lucrative stream of maintenance fees that customers would otherwise pay to the software maker.

"PeopleSoft loathes us more than anything--except, perhaps, Oracle," Ravin said. "Their whole world is about getting customers to move forward with upgrades."

PeopleSoft defended its maintenance program.

"Our world is about helping customers grow their businesses and change and evolve over time," PeopleSoft spokesman Steve Swasey said.

CEO Nelson also hails from PeopleSoft, where he specialized in software installations and upgrades for three years. He left the company in 1998 to start TomorrowNow after seeing firsthand how frustrated customers had become with juggling upgrades every three or four years and finding little benefit in it, Ravin said.

TomorrowNow is able to offer cheaper support than PeopleSoft because it's not investing million of dollars in research and development for future versions of the software, as PeopleSoft does. Instead, TomorrowNow focuses simply on keeping the software up and running for an annual fee. The fee is based on a variety of factors, including the version of the software, how many components the customer is using and the size of the company, Ravin said.

Yet, with its tiny staff, TomorrowNow can't shoulder the maintenance burden for thousands of PeopleSoft customers with the Oracle takeover jitters. The company is funded by its founders' seed capital and its own income and expects to grow its staff. Even so, it expects to add hundreds, not thousands, of new customers over the next few years, Ravins said.

The company is also likely to face competition from major consulting companies, such as Accenture and EDS, which already offer outsourcing services and are likely to see a business opportunity in the Oracle merger, if it happens. Another question PeopleSoft users may have about TomorrowNow is how they're supposed to upgrade to new versions once they let maintenance contracts with PeopleSoft lapse. By paying PeopleSoft for support, customers automatically receive the latest software releases.

According to Ravin, the money companies save using TomorrowNow's services will more than cover the costs of negotiating with PeopleSoft or Oracle, whatever the case may be, to license new versions. The company is confident enough that it's considering launching similar services for companies using software from J.D. Edwards--a company PeopleSoft acquired last year--and Siebel Systems, another rival in the market, he said. That should offer some relief to software buyers facing a growing list of extinct suppliers.