HR IT – Where it’s at

In the IT world, all eyes are on the HR software scene as the big names
jostle for position

Keith Rodgers is co-founder of Webster Buchanan Research,

Oracle’s battle to acquire rival enter-prise software vendor, PeopleSoft,
has been dragging on for almost a year, but it is still capable of delivering
some spectacular surprises for HR.

This month saw one of the biggest eyebrow-raisers yet: the revelation that
Microsoft, a relative newcomer in this software space, had held preliminary
merger talks with SAP.

Microsoft was forced to take the highly unusual step of announcing its
approach ahead of an ongoing court hearing that pits Oracle against the US
government. Earlier this year, the US Justice Department blocked Oracle’s
hostile offer – which is being vehemently resisted by PeopleSoft – on the
grounds that it would reduce competition at the high-end of the enterprise
software market from three competitors to just two – Oracle and SAP. Oracle
disputes this, arguing that other vendors should be taken into account, and
that Microsoft plans to move into the high-end market.

Knowing its confidential talks with SAP were likely to be revealed in court,
Microsoft released the news first.

Although its talks with SAP were called off at an early stage because of the
complexity of a possible merger, they will have raised eyebrows among HR users.

Microsoft isn’t best known as a player in the UK HR market. In fact, it sold
one of its HR subsidiaries, PWA Group, to Northgate Information Solutions last
autumn. But it has a portfolio of mid-market products, notably in the Axapta
suite inherited through its acquisition of Danish business software vendor,
Navision, and has plans to develop it across the board. And while it publicly
insists its interest in the market is for small and mid-sized companies, we now
know it has more than a passing interest in what is going on at the high-end.

Inevitably, both sides in the Oracle/ PeopleSoft battle are drawing their
own conclusions about Microsoft overtures to SAP. Oracle takes it as evidence
that the company has its eyes firmly set on the high-end of the applications
market, which would create new competition down the line, even if PeopleSoft is
swallowed up.

Opponents argue that the move merely reinforces how difficult it is for a
company of Microsoft’s stature to get into the high-end space, except through
acquiring an established player. For its part, Microsoft has its own concerns.
While so much attention has been focused on the high-end enter-prise market
during the hostile takeover battle, the problem for Microsoft is that
PeopleSoft, Oracle and SAP all see the mid-market as a growth area and are
pushing down into that space. That will result in stronger competition for
mid-sized organisations with larger employee bases.

For HR users, this jostling for position is far more than a spat to occupy
the minds of IT industry watchers. Competition creates choice, encourages
innovation and keeps prices down. Regardless of what software you use today,
the outcome of Oracle’s hostile bid, Microsoft’s strategic decisions and the
growing battle in the mid-market will have repercussions for years to come.

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