Feds prepare for PeopleSoft's end

Mint CIO Jerry Horton says, 'Everybody I talk to sees it as business as usual until something affects the equilibrium.'

Agencies running PeopleSoft Corp. applications have begun setting the groundwork to make sure that an Oracle Corp. takeover of the enterprise software maker won't derail government systems.

As the acquisition becomes more probable, agencies are planning a transition phase for PeopleSoft apps, which dozens of agencies use. Many government officials told GCN that they don't plan to dump their PeopleSoft systems any time soon because they want to minimize costs and, as Mint CIO Jerry Horton noted, 'chaos.'

At least initially, this approach should work. At an Oracle customer meeting in San Francisco last week, CEO Larry Ellison said, 'We're going to oversupport PeopleSoft customers.'

Though some industry observers predict Oracle will phase out PeopleSoft following a takeover, Ellison said the merged companies will be able to invest more in 'applications than Oracle and PeopleSoft could do independently, and we'll give SAP a good run,' referring to competitor SAP America Inc.

CIOs and others said agencies running PeopleSoft face three choices:
  • Retain their software, and if Oracle stops supporting it, rely on third-party maintenance

  • Migrate toward new platforms from the merged Oracle-PeopleSoft company

  • Junk their apps and open the process to other enterprise resource planning software vendors, such as SAP of Newtown Square, Pa., and CGI Group Inc. of Montreal.

Agencies could know by month's end the fate of the takeover. Oracle this week is expected to ask Delaware's Court of Chancery to throw out a PeopleSoft poison pill measure, which would let Oracle draw down stock tendered by shareholders. Oracle, offering a price of $24 a share, set a Dec. 31 deadline for stock tenders.

PeopleSoft has steadfastly rejected Oracle's offers, calling them undervalued.

Federal fallout

Whatever the outcome, the Mint's Horton says agencies will be able to weather the changes.
'Everybody I talk to sees it as business as usual until something affects the equilibrium,' Horton said. 'Oracle buying PeopleSoft will not change that until you go back through the acquisition cycle.'

The Mint has used PeopleSoft financial and manufacturing modules since 1999.
'We plan to use our current version of PeopleSoft until a business driver justifies the upgrade costs,' Horton said.

The Mint already uses a third-party contractor to maintain its PeopleSoft systems because it's not running the latest version.

Horton said the Mint has decided against replacing the apps now because that could require retraining workers.

'We also seek to minimize chaos,' Horton said. 'In an upgrade, issues can arise with data integrity and business process disruption.'

The Mint will upgrade or replace its PeopleSoft system in three to four years, Horton said.

Several government officials called the takeover a blow to federal IT because it clouds the future of PeopleSoft products.

'PeopleSoft works better [than its Oracle counterpart] because it was actually written for the government,' a federal IT worker said.

Added a Capitol Hill employee, who also is a certified Oracle database administrator, 'PeopleSoft generally runs faster than Oracle financials and is particularly suited for small agencies.'

Thomas Bennett, a management analyst with the Agriculture Department's Combined Administrative Management System program, predicted agencies would face significant expenses if they have to jettison their PeopleSoft systems. Agencies that had recently begun projects using PeopleSoft 'would have to go back to the drawing board,' he said.

'None of us knows what Oracle is going to do,' Bennett said. 'What Oracle says and what Oracle does could be two different things. They say that for a short time, they will maintain the software. After that, we don't know.'

Bennett said making the transition from PeopleSoft to Oracle systems could cost Agriculture millions of dollars.

Jerry Russomano, deputy director of software at the Federal Deposit Insurance Corp., is managing a current PeopleSoft financial module implementation.

'I don't think we would go to another product like SAP unless there were clear signs that the product we have now is going to have a limited life,' he said. 'My hope and expectation is that Oracle would take full responsibility and ownership [of PeopleSoft apps] and continue to enhance the product.'

Mary Baggett, vice president of Apogen Technologies Inc. of McLean, Va., said the Defense Department is planning to continue using PeopleSoft for the Defense Integrated Military Human Resources System.

The Pentagon last year awarded Northrop Grumman Corp. a $281 million contract to use PeopleSoft software for DIMHRS, which is set to replace about 88 personnel and pay systems. Apogen oversees Northrop Grumman's work on the project for the Navy.

'We have been assured that the takeover will have no effect on us,' she said. 'I really can't see [Oracle] buying out a company and causing a lot of havoc for such a large customer.'

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