Merger forces HR to rethink IT strategies

A multi-billion pound takeover deal between two of the largest HR software suppliers in the world will force hundreds of HR departments across the UK to re-assess their IT strategies.

Oracle’s 5.5bn takeover of PeopleSoft, which was fully completed last week, after 18 months of legal wrangling, will have an impact on hundreds of organisations across the UK. High-profile customers which use PeopleSoft software to run HR and other back-office operations include high-street bank Abbey, supermarket chain Tesco, electricals retailer Dixons, and car manufacturer Nissan.

PeopleSoft HR users should use the merger as an opportunity to re-evaluate their technology strategy, according to Mike Theaker, European partner at HR consultancy Mercer.

“They will be thinking: ‘what should we be doing’,” he said. “They can stick with a big ERP (enterprise resource planning) system like SAP or look at standalone ‘point’ applications for various parts of HR.”

However, there is unlikely to be a knee-jerk reaction from PeopleSoft users, Theaker said.  “There will not be a mad rush because it’s very expensive to move away from a big HR system.

“Most organisations will sit back and see what happens – for example, looking at Oracle’s commitment to PeopleSoft products,” he said. “Oracle is saying all the right things at the moment, but you have to remember that 12 months ago it was saying that it wanted to take PeopleSoft out of the market.”

Analyst firm AMR Research agreed that organisations should watch Oracle closely, warning that it may not be able to purchase licences under the same terms and conditions that applied to an independent PeopleSoft.

But the merger may also bring good news, AMR said, because Oracle will not want to alienate its new customer base. Some customers may even receive favourable terms and pricing. Oracle has promised to support PeopleSoft HR systems until 2013.

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