PeopleSoft rethinks portal strategy

PeopleSoft is reworking its PeopleSoft Business Network (PSBN) plan, announced with great fanfare last fall as the cornerstone of the company's long-awaited Internet strategy.

PSBN was envisioned as an online counterpart to the company's Enterprise Resource Planning (ERP) software applications. PeopleSoft plans to offer a series of e-commerce applications and services from third-party companies via the site. In essence, the site is intended to offer outsourced business applications, for a fee, to companies for internal use and for conducting business-to-business transactions.

Now, PeopleSoft has chosen to drop the use of PSBN in company literature as a defining brand name. Also, a key developer of the site has left the company. Joe Schmidt, a PeopleSoft spokesman, said that the company will no longer use the PSBN name, but that the network "is alive and well" in its development stages.

Even with the recent resignation of Tom Glassanos, one of the original PSBN developers, Schmidt assured that PSBN is still in the works and PeopleSoft has increased its staff from 50 developers to 100, bringing the division into PeopleSoft's mainstream operations. Schmidt added that the company has just simply chosen not to use "PSBN" in its company synopsis, but instead to focus on selling its e-business applications, such as e-procurement and e-store, on a piecemeal basis, which he said customers are demanding.

However, some industry analysts have said they believe PeopleSoft's Internet strategy needs more work and more substance before it can move forward.

And, while competition is the obvious motivation behind most ERP vendors' push to make their mark with an Internet vehicle, some analysts are still skeptical on whether a portal site is going to make the final cut.

"PeopleSoft is dropping PSBN and the question is in what ways will they be executing an Internet strategy going forward," said Rob Kugel, an analyst at First Albany. "A portal of some sort is a necessary component of an ERP system, but the issue is how extensive is that portal and what is it that you're putting into it."

At its user group conference held last November, the company had announced a new portal site strategy that would consist of several elements including: the development of an e-business backbone, extensions for e-business, and the PSBN, a program for managing and integrating other vendors' products into PeopleSoft's products. At that time, PeopleSoft had also said it's building a customizable interface for users that closely resembles the My Yahoo personalized news and portal interface. My Yahoo lets users customize Yahoo's Web site to deliver only news and items of interest to that user.

"ERP portals are all relatively half-baked...not the kind of Internet strategy you would put your entire business on," said Joshua Greenbaum, head of Enterprise Application Consulting in Berkeley, California. Greenbaum added that at the time when PeopleSoft "was leaderless and grasping for an Internet strategy where it could find it, PSBN looked like a good idea."

"Any company that believes it's in an ERP business has to have an Internet strategy because the Internet is integral in enterprise computing," said Kugel. "How they [PeopleSoft] execute that strategy seems to be even more up in the air to me today than it appeared when they announced PSBN. My take on it is that the evolution is more of a reflection of the realities of the marketplace they're facing and the need to rethink how they're going to address the marketplace rather than an abandonment on their Internet strategy."

After PSBN was announced, ERP competitor SAP followed with mySAP.com, a portal site that the company had said will eventually serve as a personalized hub for connecting users to customers and business partners across the Internet. As reported, mySAP.com is intended to provide one stop for everything from ordering from an online catalog to scheduling corporate meetings internally to communicating with suppliers.

Greenbaum added that in order for an ERP vendor, like PeopleSoft, to succeed with an enterprise portal, the company will need to focus on vertical markets, otherwise it will face stiff competition with other well-established horizontal portal sites, such as Yahoo.

"ERP vendors are desperate for some play in the portal market in order to defend their customer base," Greenbaum said. SAP [with mySAP.com] has been honest and careful in testing out the waters in the market, he said, which is a big difference from PeopleSoft's strong approach with PSBN--trying to constitute it as the future of the company.

"PeopleSoft is retreating back to reality," he said. "They know it's [PSBN] not the future of the company."

Jim Shepherd, an analyst with Boston-based AMR Research, said he believes PeopleSoft's Internet strategy isn't in any trouble and that it's a strategy that has "gotten very good reception."

"It's early," Shepherd added. "We're at this stage where we have a lot of application vendors trying to establish credibility, to establish themselves on the Internet. It's more of a strategy than it is a completely fleshed out set of products, but one that fits PeopleSoft well."