Applications

PeopleSoft pushes customers to upgrade

Under threat of hostile takeover, PeopleSoft offers freebies to customers that migrate to latest software release.

PeopleSoft launched a promotion on Thursday to encourage customers of its business management software to upgrade to the latest version--even as Oracle continues its disruptive takeover bid, which threatens the company's future.

Under the new program, PeopleSoft is giving away upgrade and software maintenance services and training materials. It's also offering a $100,000 line of credit toward the purchase of additional software, the company said. The freebies and other incentives are available only to customers that use PeopleSoft's computer services unit to perform the upgrade.

The promotion, which PeopleSoft announced during its annual convention in San Francisco, expires Dec. 31.

PeopleSoft is under increasing pressure from Oracle, which won an antitrust suit earlier this month that threatened to end its 15-month takeover saga. The ruling keeps Oracle's hostile bid in play and is bad news for PeopleSoft, which has blamed Oracle for its falling sales.

Customers are worried that Oracle will eventually acquire PeopleSoft and dismantle the company. Some are wondering why they should bother buying new software or upgrading to new versions of PeopleSoft's applications, if Oracle could make them obsolete.

Bill Phillips, director of information technology at Thermal Ceramics in Augusta, Georgia, is one of them. Phillips received his PeopleSoft maintenance bill, which entitles him to new versions of the software, just before he left to attend the company's convention this week. Because of the Oracle situation, he's unsure whether he'll renew the contract.

"I was waiting to see what was said at this conference," Phillips said. "I have seen nothing to feel any better about it, at this point."

PeopleSoft charges customers annual maintenance fees that entitle them to new versions of the software as well as technical support. PeopleSoft wants customers to use the latest versions so that they continue to pay the lucrative fees--which constitute nearly half of its revenue. In addition, providing technical support is cheaper for PeopleSoft, if all its customers keep up with new releases.

But many corporate software buyers complain that maintenance fees are too costly and that the constant upgrade work is a burden. One company, TomorrowNow, is convincing some of them to dump their PeopleSoft maintenance contracts by offering an alternative service for half the cost. The company says customer uncertainty over PeopleSoft's ability to fight off Oracle could boost its business.