A shortage of HR system options for mid-sized Canadian organizations
Despite a resolution in the protracted, and prickly, takeover struggle between ¬Oracle and PeopleSoft — with Oracle eventually emerging triumphant — business technology industry experts say there is little reason to expect calm in the wake.
Whether that is good or bad news for Canadian HR departments is still unclear.
The merger of the second and third largest business software companies in the North American market has fundamentally altered the landscape for HR technology customers in ways both glaring and subtle. Small and large vendors will be looking for ways to take advantage, while some say other mergers will be on the way.
One of the most obvious question marks is whether — despite its many promises to the contrary — Oracle can assimilate PeopleSoft and its customers. Many industry insiders remain skeptical.
Furthermore, what will Oracle, a company known best for its database capability, do with PeopleSoft’s highly respected HR applications?
In January, Oracle pledged to support PeopleSoft and J.D. Edwards (bought by PeopleSoft in 2003) applications through 2013 and release the planned upgrades for each, on schedule, next year.
In an e-mail to Canadian HR Reporter, David Rumer, senior director of marketing for Oracle Canada, said Oracle hopes to sell more products and services to its newly acquired customers.
“Oracle can’t do this if PeopleSoft customers aren’t content, and we will do everything in our power to ensure they are,” said Rumer.
New products from the merged companies, to be called Project Fusion, will be available in 2007. “We plan to incorporate the best features and usability characteristics from Oracle and PeopleSoft products in this new standards-based product set,” wrote Rumer.
It appears as though the big winner so far has been German-based SAP, the largest business software company. During the lengthy PeopleSoft-Oracle battle, SAP saw an increase in its business largely attributed to client aversion to the volatility that is attached to most mergers.
“Our marketplace has increased considerably over the past year and we expect that to continue,” said Bob Courteau, president and managing director of SAP Canada. Though he was reluctant to attribute all of the growth to the takeover battle between its competitors, he did admit SAP’s apparent stability is a comfort for clients. “We have had our customers tell us, ‘I made a good decision three or four years ago (to go with SAP).’”
SAP was also quick off the mark to introduce a new “Safe Passage Program” to lure what it calls common customers — those using both SAP and PeopleSoft applications — completely into the SAP fold.
Though lead actors in this technology drama are well-known for offering enterprisewide systems that are typically an option only for large organizations, small- and mid-size technology customers can also expect to see changes in the months ahead. For one thing, SAP is intent on staking a larger claim in the mid-market.
“I think the opportunities are all over the place. And one of the things that is not necessarily well-known is that we participate in all parts of the marketplace,” said Courteau. “We are growing our business in the mid-market substantially, that is a big part of our growth agenda.”
Just over a year ago, SAP introduced its Business One application for small and mid-size businesses. “We are adding well over 20 or 25 new customers every quarter in Canada, so that has been a real big success story for us.”
The PeopleSoft-Oracle deal will not be the last to shake the HR technology market, said Kenny Lew, business IT consultant with Virginia-based Noblestar and head of the PeopleSoft Mid-Atlantic Regional Users Group.
“We will see more consolidation,” he predicted. (It was revealed last year that Microsoft and SAP discussed a possible merger, though both claim the discussions went nowhere.)
There are a lot of larger players without strong HR components, said Lew. The many mid-market HR systems will be appealing takeover targets for any provider looking to improve its standing in the HR market. The clear downside for customers is that fewer options means less competition and likely higher prices, he added.
The deal should be seen as an opportunity for mid-market systems, said Jason Averbrook, CEO of Danville, Calif.-based consulting firm Knowledge Infusion, and a former vice-president at PeopleSoft.
“There won’t be a mass exodus of PeopleSoft customers over to SAP,” he said.
“But for any niche vendors, this opens the door. They need to be thinking about how to take advantage of this.”
As specialty vendors get better at integrating their solutions, the option of a handful of function specific applications — rather than an enterprisewide system — becomes increasingly attractive, he said.
The PeopleSoft-Oracle deal is good news for Best Software, said Mary Doize, vice-president and general manager for Abra HR and payroll solutions. Best Software likely won’t be able to pick up business among the large employers, she said.
“But there is quite a number of mid-market organizations which we can target,” said Doize.
There are a lot of people who feel very strongly about Oracle, she said. They aren’t happy that their PeopleSoft system is now owned by Oracle and will start looking for another provider. “We have seen that already. People saying, ‘I am on PeopleSoft and I am looking for another solution.’ I think there is going to be quite a bit of that.”
The past few years have not been great for technology providers, said Doize.
Tight budgets generally and less interest in spending on HR activities like recruiting dictated Best’s actions.
“We lightened up on investing in our recruiting solutions because there wasn’t a lot of recruiting going on and people weren’t looking for solutions to manage large numbers of applicants. Now as recruiting picks up, we’re starting to invest in recruiting,” she explained.
Expect to see more merger action, said Ian Turnbull, a Canadian HR technology expert and managing partner of Laird & Greer Management Consultants.
Sales for business software have not been great over the past few years, at least compared to the pre-2000 demand spike when so many organizations bought new systems to avoid widely feared Y2K problems.
And when a company is public, one of the favoured ways to drive up shareholder value and improve the numbers is through acquisition, he said. That is why PeopleSoft first bought J.D. Edwards, he said.
He too sees the PeopleSoft-Oracle deal as an opportunity for mid-market HR systems, though he is not sure they are ready to take advantage.
Most Canadian organizations can’t realistically buy a PeopleSoft-Oracle or SAP product, he said.
Rather there is more of a need for mid-size market products but there just aren’t that many in Canada, he said. A lot of the mid-market products look very good — not that different from the most expensive products like PeopleSoft — but they are not as comprehensive, he said.
Best Software had two good products but sold one to Kronos, and Kronos isn’t selling it in Canada. Meanwhile consulting firm Hewitt Associates bought Cyborg, a payroll system vendor, not because it wanted to sell the product but because it wanted to sell access to it as an outsourcer. “There are more companies going to want to do that,” he said.
There are some very good products out there, said HR consultant Al Doran of Toronto-based Phenix Management International. but they are too expensive for most Canadian organizations that fit into the small- to mid-size category of less than 1,500 employees.
And the products that are affordable simply don’t meet the increasingly sophisticated needs of most HR departments, he said. There are probably only a half dozen options for most Canadian organizations in the mid-size market. The vendors won’t agree, he said, but that is the truth.
The question is who can fill the gap: Will large market players make changes to offer a more affordable system, or will smaller players make improvements to their systems to meet HR department needs?
Whether that is good or bad news for Canadian HR departments is still unclear.
The merger of the second and third largest business software companies in the North American market has fundamentally altered the landscape for HR technology customers in ways both glaring and subtle. Small and large vendors will be looking for ways to take advantage, while some say other mergers will be on the way.
One of the most obvious question marks is whether — despite its many promises to the contrary — Oracle can assimilate PeopleSoft and its customers. Many industry insiders remain skeptical.
Furthermore, what will Oracle, a company known best for its database capability, do with PeopleSoft’s highly respected HR applications?
In January, Oracle pledged to support PeopleSoft and J.D. Edwards (bought by PeopleSoft in 2003) applications through 2013 and release the planned upgrades for each, on schedule, next year.
In an e-mail to Canadian HR Reporter, David Rumer, senior director of marketing for Oracle Canada, said Oracle hopes to sell more products and services to its newly acquired customers.
“Oracle can’t do this if PeopleSoft customers aren’t content, and we will do everything in our power to ensure they are,” said Rumer.
New products from the merged companies, to be called Project Fusion, will be available in 2007. “We plan to incorporate the best features and usability characteristics from Oracle and PeopleSoft products in this new standards-based product set,” wrote Rumer.
It appears as though the big winner so far has been German-based SAP, the largest business software company. During the lengthy PeopleSoft-Oracle battle, SAP saw an increase in its business largely attributed to client aversion to the volatility that is attached to most mergers.
“Our marketplace has increased considerably over the past year and we expect that to continue,” said Bob Courteau, president and managing director of SAP Canada. Though he was reluctant to attribute all of the growth to the takeover battle between its competitors, he did admit SAP’s apparent stability is a comfort for clients. “We have had our customers tell us, ‘I made a good decision three or four years ago (to go with SAP).’”
SAP was also quick off the mark to introduce a new “Safe Passage Program” to lure what it calls common customers — those using both SAP and PeopleSoft applications — completely into the SAP fold.
Though lead actors in this technology drama are well-known for offering enterprisewide systems that are typically an option only for large organizations, small- and mid-size technology customers can also expect to see changes in the months ahead. For one thing, SAP is intent on staking a larger claim in the mid-market.
“I think the opportunities are all over the place. And one of the things that is not necessarily well-known is that we participate in all parts of the marketplace,” said Courteau. “We are growing our business in the mid-market substantially, that is a big part of our growth agenda.”
Just over a year ago, SAP introduced its Business One application for small and mid-size businesses. “We are adding well over 20 or 25 new customers every quarter in Canada, so that has been a real big success story for us.”
The PeopleSoft-Oracle deal will not be the last to shake the HR technology market, said Kenny Lew, business IT consultant with Virginia-based Noblestar and head of the PeopleSoft Mid-Atlantic Regional Users Group.
“We will see more consolidation,” he predicted. (It was revealed last year that Microsoft and SAP discussed a possible merger, though both claim the discussions went nowhere.)
There are a lot of larger players without strong HR components, said Lew. The many mid-market HR systems will be appealing takeover targets for any provider looking to improve its standing in the HR market. The clear downside for customers is that fewer options means less competition and likely higher prices, he added.
The deal should be seen as an opportunity for mid-market systems, said Jason Averbrook, CEO of Danville, Calif.-based consulting firm Knowledge Infusion, and a former vice-president at PeopleSoft.
“There won’t be a mass exodus of PeopleSoft customers over to SAP,” he said.
“But for any niche vendors, this opens the door. They need to be thinking about how to take advantage of this.”
As specialty vendors get better at integrating their solutions, the option of a handful of function specific applications — rather than an enterprisewide system — becomes increasingly attractive, he said.
The PeopleSoft-Oracle deal is good news for Best Software, said Mary Doize, vice-president and general manager for Abra HR and payroll solutions. Best Software likely won’t be able to pick up business among the large employers, she said.
“But there is quite a number of mid-market organizations which we can target,” said Doize.
There are a lot of people who feel very strongly about Oracle, she said. They aren’t happy that their PeopleSoft system is now owned by Oracle and will start looking for another provider. “We have seen that already. People saying, ‘I am on PeopleSoft and I am looking for another solution.’ I think there is going to be quite a bit of that.”
The past few years have not been great for technology providers, said Doize.
Tight budgets generally and less interest in spending on HR activities like recruiting dictated Best’s actions.
“We lightened up on investing in our recruiting solutions because there wasn’t a lot of recruiting going on and people weren’t looking for solutions to manage large numbers of applicants. Now as recruiting picks up, we’re starting to invest in recruiting,” she explained.
Expect to see more merger action, said Ian Turnbull, a Canadian HR technology expert and managing partner of Laird & Greer Management Consultants.
Sales for business software have not been great over the past few years, at least compared to the pre-2000 demand spike when so many organizations bought new systems to avoid widely feared Y2K problems.
And when a company is public, one of the favoured ways to drive up shareholder value and improve the numbers is through acquisition, he said. That is why PeopleSoft first bought J.D. Edwards, he said.
He too sees the PeopleSoft-Oracle deal as an opportunity for mid-market HR systems, though he is not sure they are ready to take advantage.
Most Canadian organizations can’t realistically buy a PeopleSoft-Oracle or SAP product, he said.
Rather there is more of a need for mid-size market products but there just aren’t that many in Canada, he said. A lot of the mid-market products look very good — not that different from the most expensive products like PeopleSoft — but they are not as comprehensive, he said.
Best Software had two good products but sold one to Kronos, and Kronos isn’t selling it in Canada. Meanwhile consulting firm Hewitt Associates bought Cyborg, a payroll system vendor, not because it wanted to sell the product but because it wanted to sell access to it as an outsourcer. “There are more companies going to want to do that,” he said.
There are some very good products out there, said HR consultant Al Doran of Toronto-based Phenix Management International. but they are too expensive for most Canadian organizations that fit into the small- to mid-size category of less than 1,500 employees.
And the products that are affordable simply don’t meet the increasingly sophisticated needs of most HR departments, he said. There are probably only a half dozen options for most Canadian organizations in the mid-size market. The vendors won’t agree, he said, but that is the truth.
The question is who can fill the gap: Will large market players make changes to offer a more affordable system, or will smaller players make improvements to their systems to meet HR department needs?
