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PeopleSoft scales back acquisition aims

The troubled business management software maker will scale back its front-office plans and has chosen to partner with firms, rather than jumping into the acquisition fray.

Troubled business management software maker PeopleSoft has scaled back its front-office plans and has chosen to partner with firms, rather than jumping into the acquisition fray.

For months analysts had speculated that PeopleSoft would buy a front-office company to provide software for the automation and management of sales, customer service, and marketing services.

In March, PeopleSoft chief Dave Duffield said the company would make a big front-office announcement within a month. Yet that announcement never happened, overshadowed by a management shakeup and word that second-quarter profits had fallen 92 percent.

Last month, PeopleSoft reported net income of just $3 million, down from $39.2 million a year ago.

"For the time being, we're keeping our [front office] options open but we have nothing definitive to announce at this point," company spokesman Joe Schmidt said in an interview today.

For now, the company is continuing its long-term partnership with customer relationship management (CRM) software vendor Vantive, which this week unveiled QuickConnect for PeopleSoft.

Vantive is the first of PeopleSoft's front-office partners to take advantage of PeopleSoft's open integration framework, introduced in April as a generic interface that would simplify out-of-the-box integration for its customers. Vantive partnered with integration software firm Active Software and professional services firm KPMG to develop and implement the QuickConnect product.

Vantive competitors Siebel Systems and Clarify are also working to ease integration of their software with PeopleSoft software, said Tim Murray, director of PeopleSoft's open integration framework program.

"It's a bridge between our application and theirs," Murray said.

Integrating front-office and back-office software allows for easier information transfers, and helps companies save time--as well as money. For example, a salesperson using Vantive's integrated software to enter customer purchasing information could access shipping records through PeopleSoft's ERP software, which automates back-office business management needs, including human resources and accounting.

PeopleSoft rivals Oracle, SAP, and Baan all are in various stages of developing and shipping front-office software. Oracle recently shipped the first version of its front office suite, while Baan acquired front-office company Aurum in 1997. SAP is expected to ship its full front-office product line next year.

Dave Caruso, an analyst at Boston, Massachusetts-based AMR Research, said PeopleSoft must move forward fast with its CRM strategy to have any hope of catching up to the competition.

"The executive team is looking really hard at what they can do in the space," Caruso said, noting that the company -- along with SAP -- is losing potential profits due to tardiness in the front office space. "I would speculate that they're going to do something highly visible and important (soon)," as they reposition their software for the Web, he said.