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J.D. Edwards users warm up to PeopleSoft

PeopleSoft is earning praise from former J.D. Edwards customers. Still, many of them say they have no immediate plans to buy new applications from the business software maker.

PeopleSoft is earning guarded praise from customers of its latest acquisition, former rival J.D. Edwards.

A survey IDC released Monday showed that more than 80 percent of J.D. Edwards software users retain a positive view of PeopleSoft and the manner in which the company handled the merger. Only 9 percent of respondents to the survey said they harbor a less favorable view of the combined vendor. However, the report said 69 percent of former J.D. Edwards customers have no immediate plans to buy new software from PeopleSoft.

Albert Pang, an analyst at Framingham, Mass.-based IDC, said PeopleSoft executives have as much to worry about as they have reason to celebrate. He said that along with continued sluggishness in the enterprise software market, the company must address concerns regarding how it plans to move forward.

"From a customer support level, PeopleSoft has done an outstanding job in creating a sense of security for J.D. Edwards customers," Pang said. "What it boils down to is the fact that it will take more time for PeopleSoft to integrate the companies' products and convince customers they need to reinvest."

PeopleSoft did not immediately return calls seeking comment on the study.

Before PeopleSoft's $1.7 billion buyout of J.D. Edwards in August, both enterprise software makers built business applications catering to functions such as customer relationship management, financials and supply chain management. In December, PeopleSoft released a set of integration tools aimed at linking the acquired company's software with its own package of business software applications.

Pang said there are some concerns regarding how much PeopleSoft plans to alter service prices for J.D. Edwards products. The company already raised its service fees by roughly 5 percent, making some end users unhappy and causing them to question what additional value is being delivered along with the higher prices.

PeopleSoft also must address some of the weaker aspects of J.D. Edwards software, he said. For instance, some customers were not happy with the company's scheduling tools, and it may take a while for PeopleSoft to convince them that an integrated version of the software can work more smoothly. Pang said such product issues are potential "hidden surprises" for PeopleSoft in moving past the merger and building new tools.

However, he continues to view the deal as a positive move for PeopleSoft, he said, adding that one of the biggest obstacles to new software sales may be the overall quality of J.D. Edwards' existing products. The analyst said it became clear during his research that many J.D. Edwards customers are happy with the levels of return on investment from the applications they already own.

"Customers are looking at the fact that they may have five more years to amortize the costs of existing investments, so PeopleSoft will truly have to raise the bar in order to convince users to spend more money sooner," Pang said.

Pang added that he does not believe that there is a great amount of concern left among customers over Oracle's hostile bid to take over PeopleSoft, but he indicated that the company's management will need to think about how it can successfully handle overtures from Oracle and other potential suitors in the future.

"With more than 10,000 customers under one roof, you can be sure competitors will continue to view the combined company as a potential opportunity," he said.