In this paper we will discuss the Oracle Corporation and its aggressive bid to acquire PeopleSoft and after acquiring the way it managed its software business, employees and the merger. Even before the purchase it was a known fact that Oracle intended to discontinue PeopleSoft products eventually.
Oracle wanted to get rid of the competition from PeopleSoft because customers requiring Enterprise Resource Planning Software normally negotiated with several ERP software companies before buying one of them and since each license costs a huge amount Oracle Corporation was losing huge amount of business and hence decided to buy and ease off the competition and gain a larger market share in the enterprise level softwares.
Look for a merger or an acquisition and collect information about it.
Oracle Corporation Today
Today Oracle Corporation is ranked as the third largest software company with respect to revenue generation in the world behind only Microsoft and IBM. Oracle is known for its flagship database management software but it also produces enterprise level software namely Customer relations management (CRM), Enterprise resource planning (ERP) and supply chain management (SCM).
Oracle has become a leader in the enterprise level software by several acquisitions over the past it has aggressively acquired large companies such as Siebel Systems, PeopleSoft, Portal Software, Stellent, MetaSolv Software, Hyperion Solutions Corporation and Sun Microsystems and BEA Systems.
One of the major acquisition till today that oracle has made is its acquisition of PeopleSoft. Oracle after a long battle acquired PeopleSoft and signed an agreement for 26.50 per share (10.3 billion dollars).
Until 2004, there were four large software companies that were producing enterprise level software namely Oracle Corporation, People Soft, J D Edwards and SAP AG. The first three were in the US while the last one was in Europe.
Oracle in its bid to become the largest and biggest enterprise software maker, under the aggressive management of CEO and founder Larry Ellison, showed its intent to purchase the other smaller companies of Enterprise Resource Planning software. This resulted in long tussle between Oracle and these ERP software making companies. Oracle showed interest in acquiring PeopleSoft as well as J D Edwards and approached both the companies but its offers were rejected by their boards.
PeopleSoft later acquired J D Edwards to counter the acquisition attempts of Oracle but couldnt handle the pressure and finally was bought out after the long takeover attempts starting from 7 billion, at the beginning of 2003, and finally ending at 10.3 billion, at the end of 2004, totaling approximately 2 year.
Before being taken over by the Oracle , PeopleSoft acquired J D Edwards to stay in the business and fight off the Oracle bid , therefore it is clear that Oracle not only purchased PeopleSoft but J D Edwards too in a period of two years.
Oracle Corporation is organized into several business units, none of the members of the board, which consist of 12 members, are from PeopleSoft, the largest acquisition of Oracle to date. The Oracle had to completely change its business strategy after acquiring PeopleSoft.
Out of the four main areas in which merger and acquisition could be discussed are finance, economics, organizational, and strategy, in this paper we will discuss the strategy of the Oracle Corporation, before and after acquiring PeopleSoft, to continue and in fact grow its business in ERP domain.
As stated Oracle sole aim to acquire the PeopleSoft was to extend its business horizontally and have a bigger market share in Enterprise Resource Planning and other Enterprise related softwares. Oracle planned the transition of merging the two large companies very smoothly.
Before acquiring PeopleSoft, Oracle announced that it intends to keep the PeopleSoft existing customers and was able to retain 95 of all of its customers by providing continuous support to the PeopleSoft products and by retaining the PeopleSoft existing products, although it has stopped developing the product but the support to the PeopleSoft product has continued, Oracle though has announced in the same connection that it will fuse the PeopleSoft and Oracle ERP with a slow transitional process by introducing fusion products in 2 years time frame, Oracle is successfully following this path right now. Look at the picture 2 to have a deeper insight into the merger of Oracle and PeopleSoft businesses.
Choose one field of the four ones in the course.
Oracle after the Acquisition of PeopleSoft
After the merger the Oracle moved aggressively to integrate the PeopleSoft business with its own and not only had that Oracle emerged successfully in satisfying the customers of PeopleSoft and retaining them. Oracle was able to do this successful merger by several difficult decisions.
Change in Management
Oracle had to shuffle the whole board over the period of time as well as the management of the PeopleSoft to get rid of the competition arising within the company, this was necessary because the managers of the PeopleSoft would never be able to work in a peaceful manner with the Oracle manager, hence for the smooth running of the company this was an essential step. The reason given was the fact that PeopleSoft board fiercely fought this takeover battle
Oracle cut jobs
As a result of the merger, Oracle had to cut at least 6000 employments, mainly from People soft. At the merger the combined work force of the two companies was 55000 and hence a 9 overall reduction in employees took place. Oracle kept the engineers of PeopleSoft and J D Edwards but laid off most of the other supporting employees, it should be note that People Soft had 11,255 employees just before the acquisition by Oracle took place.
The acquisition had brought resentment among the employees of the newly acquired company because several of their co-workers had lost jobs and the co-workers feared that they would also be laid off once the transition of the two companies is complete this is a common fact and has been observed in several other mergers in the past but Oracle was able to deal professionally with it and kept the PeopleSoft and J D Edwards support and development engineers and awarded ones who were performing exceptionally hence buying their loyalty.
Change in corporate environmenIt is a known fact that PeopleSoft had an easy going and a friendly corporate environment and Oracle had a hostile and an aggressive environment. Oracle had to change its corporate strategy in the light of the new employees and the acquisition and hence it was able to complete the merger in deeper terms and brought harmony among its workforce.
Write a brief case trying to tell a story about the field you chose.
Why was the merger necessary
Both the companies had related business and hence with the merger the Oracle was able to capture a larger market in enterprise levels software and expanded into the database markets.
The aim of the merger was to give the joint company larger consumer base, extended brand reach, critical mass in more industries, and be able to provide considerable business support which has definitely been achieved.
It is of interest to note that Oracle had to buy the PeopleSoft not because it had access of cast but its power increased within the market and it controlled it in a such a way that it could dictate the cost of the product as the price of deployment of such a ERP product and its development is very cost intensive.
Analysis of the acquisition of PeopleSoft
Oracle made it clear during its bid to purchase of PeopleSoft that the PeopleSoft software products would end eventually and only the Oracle developed softwares would remain but this was to phase out at a long period of time. This was helpful for the existing customers of the PeopleSoft and J D Edwards and helped Oracle in maintaining the trust of the customers because the way the PeopleSoft was purchased scared investors, stockholders and customers and they thought that right after the purchase the product support would end but nothing like that happened and hence Oracle gained market credibility.
Before the acquisition Oracle explained in detail to the customers and the stockholders that this buy out will cause Oracle to have operational skills with increased distribution channel and enhanced technology and it would be benefit of the customer and in the long run increase the worth of the companys stock.
The studies show the Oracle had a very detailed plan on how to integrate the engineers of the new company with its own and how to develop products so that the PeopleSoft product is phased out but at the same time the customers are not affected this was a very vital part of the merger as the engineers were to be trained to develop the code for the Oracle who came from PeopleSoft and at the same time keep the company integrated, as there was a chance of old engineers vs. new engineers battle and hence a complete collapse of the company was possible.
Since there was no other bidder for PeopleSoft and the full intention was to end the business of PeopleSoft and the bid to acquire was hostile, Oracle received much criticism and got defame but it quickly gained it back and gained the confidence of the customers by adopting the strategy of providing continuous support to the PeopleSoft customers.
This acquisition provided expansion possibilities for the Oracle by removing a large competitor and letting the Oracle maintain a large market and enabled it to dictate the prices.
During the legal takeover battle, SAP, the second largest Enterprise Software maker, successfully gained importance and took advantage of the situation and was able to convince the PeopleSoft and J D Edwards customers to migrate to the SAP with financial incentive as Oracle was suppose to push for its own software and may have caused these customers to spend millions of dollars.
The transitional process of the merger of two companies is important and we will relate one of the slides used in the class with it and explain accordingly that how did the transition worked with respect to the product as well as the employees.
Figure 1 companys merger and then integration
Then write analysis using the models and theories in the course
Figure 1 explains how the integration of two companies take place , After the takeover the PeopleSofts was completely absorbed in Oracle with reference of manufacture, marketing and financial control, though there was overlapping manufacturing taking place to support the existing business of PeopleSoft and this corresponds to the right most and top most potion of this graph.
This merger was very complex it involved the regulatory policy makers from US and EU which monitored the transition in the light of antitrust laws. Both the companies had large number of customers with multinational businesses hence the negative impact to the joint company could have affected these businesses. Further the transition was of very importance as this affected the economy of the world on a large scale and there was much speculation. Oracle utilized the merger and acquire polices to effectively channel the integration and growth of the Enterprise Resource Planning
This acquisition benefited Oracles shareholders and increased the economies of scale as well as economies of scope and today, after 5 years the company is doing very well and its future is very promising.
Figure 2 A timeline displaying Oracle Corporations acquisition of PeopleSoft, Inc, software product release dates and maintenance support for ERP applications through 2013.
The merger has lead to the emergence of one ERP company and now the customers no longer have to look at several options to choose one, this has ended the options for the customers but it is also good for them, the single vendor has resulted in better products and customers can now purchase newer modules and build upon their existing database and ERP with their growing needs.
The reporting structure within the Oracle has been simplified too the main arms of Oracle today are Marketing, Support, Research and Development. The simplified structure has lead to more concrete efforts on building systems that can help the large as well as small companies.
At this point we can look at another slide from the course and can relate very well to our case study, as you can see the merger has resulted in common product and process technology and there is a central R D now which can focus more.
The best of the two design teams have now come together to give customers a product that is very user friendly , other items from the list can also be easily related to the Oracle- PeopleSoft merger case.
If you relate to the slide from the course it is clear that the merger has further resulted in unified strategy of the company in terms of shareholders, accounting, , management style, Legislation, governmental relations etc.
The corporate value of the Oracle after merging with the PeopleSoft has also increased, as you can see that the two companies had their own worth but when combined together their value has increased even more because of the corporate membership benefits. Utilizing the concept of Corporate Value formula we can demonstrate that this merger has caused in increase in the value of the two businesses combined.
Mcor value resulting as a result of combing all these entities as their combined technical and marketing and support departments can better serve the customers and help increase in the business of Oracle Corporation
Future of Oracle
With this acquisition and series of others Oracle Corporation has become a leading Enterprise Resource Planning and Database management company. Gartner in its 2008 report mentioned that Oracle had a share of 48.9 in the Worldwide RDBMS Market Share 48.9.
Oracle became a leading supplier and of Enterprise Resource Planning Software with several acquisitions one of the largest acquisitions it has done to date is of PeopleSoft, the bid was hostile and PeopleSoft rejected and tried to stop the acquisition for at least two years but later couldnt hold and the company was sold to Oracle at a price of 10.3 billion US dollars.
The acquisition made the Oracle third largest software revenue maker in the world and increased its market share, Oracle due to this merger holds more market share then 6 of its closest competitors, To manage the acquisition and merger of the product, the Oracle management had devised a detailed plan and one main way to integrate the two companies and save the business was by continued support of the PeopleSoft products for a long period of time, this helped retained the customers of the acquired company and fulfilled the purpose of the merger.
Oracle wanted to get rid of the competition from PeopleSoft because customers requiring Enterprise Resource Planning Software normally negotiated with several ERP software companies before buying one of them and since each license costs a huge amount Oracle Corporation was losing huge amount of business and hence decided to buy and ease off the competition and gain a larger market share in the enterprise level softwares.
Look for a merger or an acquisition and collect information about it.
Oracle Corporation Today
Today Oracle Corporation is ranked as the third largest software company with respect to revenue generation in the world behind only Microsoft and IBM. Oracle is known for its flagship database management software but it also produces enterprise level software namely Customer relations management (CRM), Enterprise resource planning (ERP) and supply chain management (SCM).
Oracle has become a leader in the enterprise level software by several acquisitions over the past it has aggressively acquired large companies such as Siebel Systems, PeopleSoft, Portal Software, Stellent, MetaSolv Software, Hyperion Solutions Corporation and Sun Microsystems and BEA Systems.
One of the major acquisition till today that oracle has made is its acquisition of PeopleSoft. Oracle after a long battle acquired PeopleSoft and signed an agreement for 26.50 per share (10.3 billion dollars).
Until 2004, there were four large software companies that were producing enterprise level software namely Oracle Corporation, People Soft, J D Edwards and SAP AG. The first three were in the US while the last one was in Europe.
Oracle in its bid to become the largest and biggest enterprise software maker, under the aggressive management of CEO and founder Larry Ellison, showed its intent to purchase the other smaller companies of Enterprise Resource Planning software. This resulted in long tussle between Oracle and these ERP software making companies. Oracle showed interest in acquiring PeopleSoft as well as J D Edwards and approached both the companies but its offers were rejected by their boards.
PeopleSoft later acquired J D Edwards to counter the acquisition attempts of Oracle but couldnt handle the pressure and finally was bought out after the long takeover attempts starting from 7 billion, at the beginning of 2003, and finally ending at 10.3 billion, at the end of 2004, totaling approximately 2 year.
Before being taken over by the Oracle , PeopleSoft acquired J D Edwards to stay in the business and fight off the Oracle bid , therefore it is clear that Oracle not only purchased PeopleSoft but J D Edwards too in a period of two years.
Oracle Corporation is organized into several business units, none of the members of the board, which consist of 12 members, are from PeopleSoft, the largest acquisition of Oracle to date. The Oracle had to completely change its business strategy after acquiring PeopleSoft.
Out of the four main areas in which merger and acquisition could be discussed are finance, economics, organizational, and strategy, in this paper we will discuss the strategy of the Oracle Corporation, before and after acquiring PeopleSoft, to continue and in fact grow its business in ERP domain.
As stated Oracle sole aim to acquire the PeopleSoft was to extend its business horizontally and have a bigger market share in Enterprise Resource Planning and other Enterprise related softwares. Oracle planned the transition of merging the two large companies very smoothly.
Before acquiring PeopleSoft, Oracle announced that it intends to keep the PeopleSoft existing customers and was able to retain 95 of all of its customers by providing continuous support to the PeopleSoft products and by retaining the PeopleSoft existing products, although it has stopped developing the product but the support to the PeopleSoft product has continued, Oracle though has announced in the same connection that it will fuse the PeopleSoft and Oracle ERP with a slow transitional process by introducing fusion products in 2 years time frame, Oracle is successfully following this path right now. Look at the picture 2 to have a deeper insight into the merger of Oracle and PeopleSoft businesses.
Choose one field of the four ones in the course.
Oracle after the Acquisition of PeopleSoft
After the merger the Oracle moved aggressively to integrate the PeopleSoft business with its own and not only had that Oracle emerged successfully in satisfying the customers of PeopleSoft and retaining them. Oracle was able to do this successful merger by several difficult decisions.
Change in Management
Oracle had to shuffle the whole board over the period of time as well as the management of the PeopleSoft to get rid of the competition arising within the company, this was necessary because the managers of the PeopleSoft would never be able to work in a peaceful manner with the Oracle manager, hence for the smooth running of the company this was an essential step. The reason given was the fact that PeopleSoft board fiercely fought this takeover battle
Oracle cut jobs
As a result of the merger, Oracle had to cut at least 6000 employments, mainly from People soft. At the merger the combined work force of the two companies was 55000 and hence a 9 overall reduction in employees took place. Oracle kept the engineers of PeopleSoft and J D Edwards but laid off most of the other supporting employees, it should be note that People Soft had 11,255 employees just before the acquisition by Oracle took place.
The acquisition had brought resentment among the employees of the newly acquired company because several of their co-workers had lost jobs and the co-workers feared that they would also be laid off once the transition of the two companies is complete this is a common fact and has been observed in several other mergers in the past but Oracle was able to deal professionally with it and kept the PeopleSoft and J D Edwards support and development engineers and awarded ones who were performing exceptionally hence buying their loyalty.
Change in corporate environmenIt is a known fact that PeopleSoft had an easy going and a friendly corporate environment and Oracle had a hostile and an aggressive environment. Oracle had to change its corporate strategy in the light of the new employees and the acquisition and hence it was able to complete the merger in deeper terms and brought harmony among its workforce.
Write a brief case trying to tell a story about the field you chose.
Why was the merger necessary
Both the companies had related business and hence with the merger the Oracle was able to capture a larger market in enterprise levels software and expanded into the database markets.
The aim of the merger was to give the joint company larger consumer base, extended brand reach, critical mass in more industries, and be able to provide considerable business support which has definitely been achieved.
It is of interest to note that Oracle had to buy the PeopleSoft not because it had access of cast but its power increased within the market and it controlled it in a such a way that it could dictate the cost of the product as the price of deployment of such a ERP product and its development is very cost intensive.
Analysis of the acquisition of PeopleSoft
Oracle made it clear during its bid to purchase of PeopleSoft that the PeopleSoft software products would end eventually and only the Oracle developed softwares would remain but this was to phase out at a long period of time. This was helpful for the existing customers of the PeopleSoft and J D Edwards and helped Oracle in maintaining the trust of the customers because the way the PeopleSoft was purchased scared investors, stockholders and customers and they thought that right after the purchase the product support would end but nothing like that happened and hence Oracle gained market credibility.
Before the acquisition Oracle explained in detail to the customers and the stockholders that this buy out will cause Oracle to have operational skills with increased distribution channel and enhanced technology and it would be benefit of the customer and in the long run increase the worth of the companys stock.
The studies show the Oracle had a very detailed plan on how to integrate the engineers of the new company with its own and how to develop products so that the PeopleSoft product is phased out but at the same time the customers are not affected this was a very vital part of the merger as the engineers were to be trained to develop the code for the Oracle who came from PeopleSoft and at the same time keep the company integrated, as there was a chance of old engineers vs. new engineers battle and hence a complete collapse of the company was possible.
Since there was no other bidder for PeopleSoft and the full intention was to end the business of PeopleSoft and the bid to acquire was hostile, Oracle received much criticism and got defame but it quickly gained it back and gained the confidence of the customers by adopting the strategy of providing continuous support to the PeopleSoft customers.
This acquisition provided expansion possibilities for the Oracle by removing a large competitor and letting the Oracle maintain a large market and enabled it to dictate the prices.
During the legal takeover battle, SAP, the second largest Enterprise Software maker, successfully gained importance and took advantage of the situation and was able to convince the PeopleSoft and J D Edwards customers to migrate to the SAP with financial incentive as Oracle was suppose to push for its own software and may have caused these customers to spend millions of dollars.
The transitional process of the merger of two companies is important and we will relate one of the slides used in the class with it and explain accordingly that how did the transition worked with respect to the product as well as the employees.
Figure 1 companys merger and then integration
Then write analysis using the models and theories in the course
Figure 1 explains how the integration of two companies take place , After the takeover the PeopleSofts was completely absorbed in Oracle with reference of manufacture, marketing and financial control, though there was overlapping manufacturing taking place to support the existing business of PeopleSoft and this corresponds to the right most and top most potion of this graph.
This merger was very complex it involved the regulatory policy makers from US and EU which monitored the transition in the light of antitrust laws. Both the companies had large number of customers with multinational businesses hence the negative impact to the joint company could have affected these businesses. Further the transition was of very importance as this affected the economy of the world on a large scale and there was much speculation. Oracle utilized the merger and acquire polices to effectively channel the integration and growth of the Enterprise Resource Planning
This acquisition benefited Oracles shareholders and increased the economies of scale as well as economies of scope and today, after 5 years the company is doing very well and its future is very promising.
Figure 2 A timeline displaying Oracle Corporations acquisition of PeopleSoft, Inc, software product release dates and maintenance support for ERP applications through 2013.
The merger has lead to the emergence of one ERP company and now the customers no longer have to look at several options to choose one, this has ended the options for the customers but it is also good for them, the single vendor has resulted in better products and customers can now purchase newer modules and build upon their existing database and ERP with their growing needs.
The reporting structure within the Oracle has been simplified too the main arms of Oracle today are Marketing, Support, Research and Development. The simplified structure has lead to more concrete efforts on building systems that can help the large as well as small companies.
At this point we can look at another slide from the course and can relate very well to our case study, as you can see the merger has resulted in common product and process technology and there is a central R D now which can focus more.
The best of the two design teams have now come together to give customers a product that is very user friendly , other items from the list can also be easily related to the Oracle- PeopleSoft merger case.
If you relate to the slide from the course it is clear that the merger has further resulted in unified strategy of the company in terms of shareholders, accounting, , management style, Legislation, governmental relations etc.
The corporate value of the Oracle after merging with the PeopleSoft has also increased, as you can see that the two companies had their own worth but when combined together their value has increased even more because of the corporate membership benefits. Utilizing the concept of Corporate Value formula we can demonstrate that this merger has caused in increase in the value of the two businesses combined.
Mcor value resulting as a result of combing all these entities as their combined technical and marketing and support departments can better serve the customers and help increase in the business of Oracle Corporation
Future of Oracle
With this acquisition and series of others Oracle Corporation has become a leading Enterprise Resource Planning and Database management company. Gartner in its 2008 report mentioned that Oracle had a share of 48.9 in the Worldwide RDBMS Market Share 48.9.
Oracle became a leading supplier and of Enterprise Resource Planning Software with several acquisitions one of the largest acquisitions it has done to date is of PeopleSoft, the bid was hostile and PeopleSoft rejected and tried to stop the acquisition for at least two years but later couldnt hold and the company was sold to Oracle at a price of 10.3 billion US dollars.
The acquisition made the Oracle third largest software revenue maker in the world and increased its market share, Oracle due to this merger holds more market share then 6 of its closest competitors, To manage the acquisition and merger of the product, the Oracle management had devised a detailed plan and one main way to integrate the two companies and save the business was by continued support of the PeopleSoft products for a long period of time, this helped retained the customers of the acquired company and fulfilled the purpose of the merger.
Loved the volume of information and the writing style.
ReplyDeleteGood and very informative article about the service management software.
ReplyDeleteSuccess facts about ERP software