The competitors who worry PeopleSoft Inc. the most are no longer the SAPs and the Baans of the ERP world but the overnight-sensation Internet start-up companies, according to Howard Gwin.
“There are players out there today lunching off our backbone,” said Gwin, PeopleSoft’s senior vice-president of worldwide operations at a recent presentation in Toronto. He was in town to discuss the company’s new PeopleSoft Business Network (PSBN) initiative and how ERP will change in the next decade.
For one thing, it seems everybody’s got a portal on the Web these days, Gwin noted.
“We thought that was amusing for about a day, then we stopped laughing.” He predicts that enterprise backbones are going to shrink and many processes will be moved on-line.
“At the end of the day, the consumer won’t care if the content that comes to them is from software, a service provider, an Internet play or a bank. At the end of the day, all that’s going to matter is content,” he said.
Spending too much time building up the backbone is what “killed” Baan, he said. “When you build a backbone and you try and integrate products that are a different technology, it kills you, it sucks the life out of you. And by the time you finish the integration and stick your head up…the market’s gone Internet.”
“We have to take our blinders off, and they are tough to take off because most software companies that build a backbone end up having an installed base and…customers.”
Customers are the best thing you can have — but customers can also hold you back, he said. “The reason they inhibit you is because as a new technology comes down the road, you spend a lot of time managing the software you sold to your customer. That’s what happens to large software companies.”
Many software firms enmeshed in the backbone business spend about 80 per cent of their development resources maintaining their customer relationships, “while fast start-ups are building functionality that’s Internet-enabled off your backbone.”
Users don’t want to deal with the complexity of the software that’s driving their Web portals, he explained.
In this new world, Gwin said, PeopleSoft will differentiates itself through the content and value coming to users’ desktop. “And it doesn’t have to come from software — it doesn’t even have to come from our software. It could come from anywhere.”
PeopleSoft’s strategy is to make sure whatever sits behind the portal is valuable to the desktop, Gwin said. That means products and implementation services that are built and templated to go in fast.
“So the new ERP play is taking software and banging it in to get value quickly.” The next step is “decoupling” PeopleSoft’s backbone and Internet-enabling everything within it.
SAP’s biggest strength is that it has a tightly integrated backbone, he said. “But in the Internet world, who cares?” Gwin asked.
Gwin said PeopleSoft is going to concentrate on packaging the backbone to get its development time focused on driving new applications. “Because if we don’t, this market will split up and the backbone will break down, with chunks of ribs and vertebrae all over the place.”
Dave Marshall, director of software research at Toronto-based IDC Canada Ltd., agreed the ERP market is going to require much more flexibility on the vendors’ part than in the past.
“PeopleSoft obviously recognizes that the whole ERP market place as we know it now needs to be transformed, and will transform,” he said.
“They now realize that they are going to have to go out and not only compete with everybody, but cooperate with everybody. But how that’s going to play out, I think, is probably a big question mark.”
Three significant impacts — from client/server, the Euro and Y2K — “have made this industry a lot of fun over the last couple of years,” Gwin explained. “It’s less fun now, because now we’re talking to pragmatic buyers.”
He stressed companies looking to buy ERP solutions are much more practical, and are looking for industry-templated solutions that go in quickly.
“Organizations aren’t prepared to pay $100 million as they have (in the past) for our products, or for SAP’s products to be implemented.”
Some companies have even spent upwards of $1 billion on ERP implementations, he noted. “That’s the gross national product of some countries in the world. And it’s just software.”
PeopleSoft will be releasing the first three of several Internet business communities this summer, as part of its PSBN initiative, and plans to roll out more than 25 more role-specific applications over the next few months.
“We have to get it out of our heads that we’re in the software business — we’re not,” Gwin added.
“We build software, we write content, we have to educate, we have to analyse — all of those other things are what the ERP industry is like. And if we don’t hit them all, we’re toast.”