Global acquisitions make waves in local channel
1 April 2005 | 0
Irish partners of major companies that have been taken over in recent months are bracing themselves for the fallout that will sooner or later affect their customers and their new channel relationships. The situation is particularly marked for those who were the exclusive local representatives for the acquired companies.
The takeover in December of IBM’s PC business, the third largest PC maker in the world, by China’s Lenovo will have likely long-term implications for Sharptext which is IBM’s only distributor in Ireland. Although the road map for transition is planned to occur gradually over the next few years, during which PCs made by the company will transition in stages from bearing the IBM brand, to being cobranded with both names before eventually Lenovo emerges as the sole badge, the Chinese company’s strength in the consumer PC market is likely to bring new opportunities, according to Sharptext’s MD Paul White. ‘I’m very positive about the prospects,’ he told Channels. ‘I think it will lead to us having more competitively priced products that will allow us to expand into the retail market.’
Oracle’s $10.3bn takeover of PeopleSoft in December, completed only after a long and hostile effort, is bound to have more immediate implications for Software Resources, a company that was the long-time Irish representative of JD Edwards, an ERP software company that was itself taken over by PeopleSoft in 2003.
As there was little or no installed base for PeopleSoft’s ERP software in Ireland, that earlier acquisition had little effect on Software Resources’ business and it carried on being, in the words of MD Joe Gorman: ‘the company that 95 per cent of JD Edwards customers in Ireland looked to for support’ of that product.
By contrast, Oracle has moved quickly to release its product road map which will provide a unified upgrade path for all three ERP systems the company now owns, namely PeopleSoft Enterprise 9.0, EnterpriseOne 8.12 (the original JD Edwards product) and its own Oracle E-Business Suite 12 into a single product to be called Fusion. Oracle expects to release individual Fusion applications in 2007 with a full suite released in 2008.
In tandem, Oracle has promised to continue development of existing PeopleSoft products for the next two years and to provide support for existing platforms until 2013, but clearly the company would prefer that most PeopleSoft customers would make the transition to the Fusion platform.
However, users will have another option as SAP, the leading ERP developer in a market now dominated by just two companies, has moved to persuade PeopleSoft customers to upgrade not to Oracle’s Fusion but to SAP’s mySAP ERP software. A program called SAP Safe Passage offers incentives including ‘trade-in’ credits which can be as much as 75 per cent for users willing to make the switch.
Gorman told Channels that Software Resources was currently ‘working well’ with Oracle locally in supporting the existing PeopleSoft user base. ‘Oracle hasn’t bought PeopleSoft to let its customers go,’ he said. ‘Customer retention is very important.’ He said that Oracle had provided a significant ‘comfort factor’ to PeopleSoft’s customers and that it was Software Resources’ intention to become an accredited Oracle reseller.
When asked whether he would consider moving instead into the SAP camp, he chose his words carefully. ‘That’s kind of unlikely at the moment,’ he said. ‘We’ve taken the view that Oracle has adopted the JD Edwards customer base and is making all the right noises at the moment. Its approach is providing the right comfort to those customers.’
He added that Software Resources would have to build new relationships within the changed context but pointed out: ‘We had started to broaden our portfolio already.’ Prior to the merger the company had ‘become a partner for Data Suite and also for Business Objects. We’ll move out to other areas as appropriate.’
As regards IBM’s PC business, the situation in the channel remains ‘business as usual’ for the time being at least according to White of Sharptext. ‘We’re dealing with the same IBM executives on the ground,’ he said, ‘and they will eventually become part of the new organisation.’ He welcomed the fact that Sharptext would be selling Chinese-made PCs. ‘Clearly the price pressures in the PC business are such that you have to be manufacturing in low-cost regions,’ he said.