4 June 2003 Tom Siebel has launched a scathing attack on the surprise $1.7 billion merger of enterprise resource planning (ERP) software suppliers PeopleSoft and JD Edwards (JDE) that was announced earlier this week.
Siebel, the co-founder and CEO of Siebel Systems, the market leader in the customer relationship management (CRM) sector where PeopleSoft and JDE have been trying to make inroads, said the combination made little sense and was unlikely to deliver benefits to the two companies’ thousands of customers.
Speaking at his company’s European customer fair in Cannes, France, yesterday, Siebel suggested that the deal was a strange and risky venture. “It is a curious business combination,” he said. “I am perplexed. Where is the customer benefit of this combination? I just don’t see it.”
However, Siebel speculated on one possible motivation for the merger: “If you look at both these companies, most of their revenue comes from services. It looks like their strategy is to become a professional services company.”
Integrating the two companies’ technologies and cultures would be “pretty difficult”, said Siebel, pointing out that California-based PeopleSoft and Colorado-based JDE are not only located about 1,000 miles apart but base their products on several different code structures.
“It looks as though there is a lot of risk and not a lot of return associated with the deal,” he said.
While Siebel’s views may be dismissed by some as the predictable outburst of a competitor, his has not been the only voice of criticism this week. Many financial analysts have questioned the rationale behind the merger while a number of industry commentators say it will be challenging to integrate the two companies.
“Though the merger is simple in concept, execution will entail abundant complexities,” said a research note from Gartner, the IT analyst group.
Meanwhile, it emerged today that JDE co-founder Ed McVaney first discussed a possible merger with his opposite number at PeopleSoft, David Duffield, several years ago.
The two companies discussed the matter periodically, said McVaney, JDE’s then chairman and CEO, but obstacles got in the way, such as the millennium bug and the difficult economy. The two companies renewed their merger talks towards the end of 2002, he added.
