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PeopleSoft plays front office field

PeopleSoft is playing the front office field and still isn't making any real commitments to expand its offerings beyond the back office.

PeopleSoft is playing the front office field, and still isn't making any real commitments to expand its offerings beyond the back office.

The Pleasanton, California-based maker of business automation software announced today that it is partnering with two archrivals in the front office automation market, Siebel Systems and Vantive Corporation.

"Our product strategy consists of building primarily, but on occasion we buy and partner," said Robert Eve, PeopleSoft's newly appointed vice president of alliances. Eve was recently lured away from Oracle where he led the alliance program.

"When we looked at the sales force automation, marketing management, and customer support arena, we tried to understand the requirements of our customers," Eve continued. "Since it is an extremely important business function and has top-line advantages for companies that implement it effectively, we decided our customers needed to work with the branded No. 1 and No. 2 players. Siebel and Vantive have that status."

But the partnerships do not go much deeper than relationships PeopleSoft already has with the companies and PeopleSoft is not taking complete ownership of the integration, which its competitors, like Oracle, have done in similar situations. Instead, PeopleSoft is taking co-ownership and directing customers to the partner for help when necessary.

PeopleSoft's competitors, however, have all taken much bolder steps and have in effect completely engulfed front office features, making it an integral part of enterprise resource planning systems and making themselves the single source of contact for customers.

"PeopleSoft is clearly saying they are not going to join the group and build this into an even broader ERP suite," said Tom Gormley, analyst at Forrester Research in Cambridge, Massachusetts. "They are the standout because everyone else has built it or owned it. This is surprising."

SAP, Oracle, and Baan are already offering or are deep in development of front office applications, which manage sales, marketing, customer service, call center, and help desk functions.

Baan bought leading front office software player Aurum more than a year ago. SAP is ready to roll out its offering which it built and supplemented with products from companies in which it invested. And Oracle built a suite of products itself supplementing its call center software offering by buying Versatility last week.

"It may just be that, for now, PeopleSoft has too much on its plate still and doesn't want to take on one more thing," Gormley speculated. "It's hard enough to compete against SAP and do everything they do which PeopleSoft can't do because it doesn't have the resources SAP does. PeopleSoft seems to be waiting until it's an issue [that] they don't have an integrated front office system."

But PeopleSoft has a rather successful history of playing catch up in the market. It released its financial management module long after SAP and Oracle were gaining notoriety in the market and was able to make headway. PeopleSoft also didn't release a manufacturing module until last year which it developed from the technology it gained buying Red Pepper Software. The manufacturing module is still taking root, but PeopleSoft has landed a few key accounts to give it credibility, including Toyota and Domino's Pizza.

But the partnerships also put PeopleSoft in the precarious position of balancing relationships with two long time rivals. PeopleSoft has also had a much stronger partnership with Vantive and has been rumored for some time to be in merger talks with the Santa Clara, California firm. But today's announcement puts Siebel on an equal footing with Vantive.

PeopleSoft also has to deal with the fact that both Siebel and Vantive have partnerships with PeopleSoft's competitors. In fact, Vantive announced just yesterday a program to make it easier to integrate its products to SAP's, Oracle's, and PeopleSoft's systems. The Oracle product is to be ready first with SAP and PeopleSoft to follow but no date was given. PeopleSoft said today that integration with Siebel and Vantive should be complete the first half of next year.

Gormley said the market is such today that PeopleSoft should be able to juggle both relationships and give them equal attention. But eventually, PeopleSoft is going to have to make a decision about whether to more tightly align with one or the other, or build its own product, as customers come to expect front office systems from enterprise resource planning vendors.