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Does PeopleSoft strategy include a buy?

PeopleSoft is banking its late-to-market front-office strategy on a soon-to-be-announced acquisition, analysts say.

PeopleSoft is banking its late-to-market front-office strategy on a soon-to-be-announced acquisition, analysts say.

The struggling business software maker is preparing to buy a midsized front-office player to boost its offering in the competitive space and analysts say the short list of PeopleSoft's possible targets include Campbell, California-based Saratoga Systems, Austin-based Trilogy, British Columbia-based Pivotal, or Bellevue, Washington-based Onyx.

Any acquisition would follow PeopleSoft CEO Dave Duffield's promise at last month's Gartner Group spring conference that the company would make a key front-office strategy announcement within the next month.

The company has no further comment on any possible acquisition, said PeopleSoft spokesman Andrew McCarthy. PeopleSoft currently has partnerships with Siebel and Vantive. Last year, PeopleSoft said it intends to deliver integrated products with Vantive, a long-term rumored merger partner, and Siebel within the first half of 1999.

"PeopleSoft really doesn't have a front-office strategy to put it quite bluntly," said Steve Bonadio, analyst at Hurwitz, a Framingham, Massachusetts-based consultancy. Bonadio said he'd be surprised if an acquisition is eminent, in light of the firm's recent financial troubles that have led to layoffs. "They're struggling right now and I don't know if it's a good time to buy anyone, to tell you the truth," he said.

Nonetheless, analysts say PeopleSoft has little choice but to move into the lucrative and hotly competitive area of so-called Customer Relationship Management(CRM).

"A match in the front office would be good for [PeopleSoft]," said Peggy Menconi, analyst at Boston-based AMR Research. PeopleSoft rivals Oracle, SAP, and Baan all now have pieces of a front-office strategy, which includes software to automate corporate sales, services, marketing, and call centers.

SAP is beta testing its sales products now. Meanwhile, Oracle announced new front office plans last month, and Baan bought front-office software vendor Aurum in 1997.

Mark Barrenechea, senior vice president for Oracle's front-office products division, said the company plans to "go head to head with [No. 1 front-office vendor] Siebel."

Barrenechea said he expects Oracle's front-office business to grow 300 percent this year, and that the company intends to pass Siebel rivals Vantive and Clarify in sales by the end of 1999. But that remains to be seen, analysts said.

"[Oracle] could prove to be a real powerhouse," said Judy Hodges, analyst at International Data Corporation in Framingham, Massachusetts. "But they're not there yet." Hodges said. Siebel Systems is the only company that has a complete, integrated front office suite, she said.

Oracle has already tried to trump SAP's front-office strategy by promising its own sales application, called Oracle Application InterConnect, which links sales, service, and e-commerce applications to SAP's flagship R/3 suite. Oracle is promising general availability by the end of the second quarter.

SAP's first front-office applications, Mobile Sales 1.1 and Mobile Service 1.1, are due this summer, but may be late, according to analysts.