The company formalized its long-time relationship with Intrepid Systems today by acquiring the maker of retail management software. The stock swap is valued at about $57.7 million, based on current trading prices.
Intrepid, which is privately held, has 230 employees and earned $20 million in revenue last year with an operating loss, according to Rich White, president and CEO of Intrepid.
PeopleSoft and Intrepid have had a relationship dating back more than a year. Of PeopleSoft's 130 and Intrepid's 37 retail customers, the companies share ten clients, including Wal-mart and Woolworth.
"Seven of the ten leading retailers are already using PeopleSoft HR, supply-chain, and financial applications," said Curt Brasfield, general manager of PeopleSoft's retail business unit. "They now have a single place to turn for an enterprise solution on a single platform."
PeopleSoft, which makes software that manages internal company processes, called on Intrepid 18 months ago to provide the $3 billion retail market with software for managing merchandise and distribution along with decision support systems.
PeopleSoft brought to the table its stable of human resources, financial, and manufacturing applications. Bundled together, the applications allow retail firms to computerize their operations to track changes in sensitive consumer-buying patterns, as well as keep an eye on stock levels.
It was the beginning of PeopleSoft's push into vertical markets, a trend that has absorbed the enterprise resource planning market as PeopleSoft competitors like SAP, Oracle, Baan align their operations around specific industries.
In fact, it is SAP that is most likely to give PeopleSoft the biggest fight in the retail market. SAP announced last year a retail product and has done well with it in the European market.
Brasfield admitted that the acquisition was in part to bolster PeopleSoft's attempts to hold enterprise market SAP at bay in the North American retail market.
"The major competitor in this market is SAP," Brasfield said. "I believe we are in a better position than them with this deliverable solution and our position already in the marketplace. [With Intrepid] we now have domain expertise and knowledge of business processes and the requirements of entities in the retail marketplace.''
Industry analysts agree PeopleSoft's penetration into the market with its HR and financial product puts it in a strong position.
"From a CIO's standpoint, they have worked with PeopleSoft and trust the software," said Tom Friedman, analyst at Retail Systems Alert in Newton, Massachusetts. "It's a significant advantage over SAP."
Friedman said it's also a big plus for the retail industry, which is now scrambling for packaged applications to replace aging homegrown systems. And as major players like PeopleSoft and SAP enter the market, more acquisitions of niche software vendors are sure to follow, with other ERP companies like Oracle leading the way.
"Retailers are consolidated big companies and want to buy software from big companies," Friedman said. "They are not going to buy from boutiques."
PeopleSoft has generally relied on acquisitions to propel itself into lucrative new enterprise resource planning markets. After a long term partnership, PeopleSoft bought Red Pepper Software two years ago to spice up its offerings and enter the manufacturing and supply chain management market.
And PeopleSoft has had a long standing relationship with Vantive for sales force automation applications. The two companies have been rumored to be in talks of a merger, however, PeopleSoft executives would not comment on their plans.