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Heger, the chief information officer at Russ Berrie and Co., a $330 million maker of gifts and furnishings based in Oakland, N.J., plans to remain a PeopleSoft customer. Russ Berrie is going ahead with a long-planned upgrade to its PeopleSoft enterprise resource planning software, even as Oracle's dogged pursuit of its rival raises doubts about the future support and development of PeopleSoft products.
Yet whether Russ Berrie will end up as an Oracle customer in the long term is an open question. Heger is adamant that he, not the dueling vendors, will decide his company's software strategy, and that Russ Berrie management will not be passive in the face of market turmoil. "We will not be forced to convert to Oracle," he says. "We run our company the way we want to, and we find it disconcerting that other people would have a say in our investment."
Prepare to be disconcerted. Software deals are in the news these daysand not just the long-running Oracle-PeopleSoft saga. There's also this fall's much tidier $439 million purchase of security software vendor Netegrity Inc. by Computer Associates International Inc.; the disclosure that Microsoft Corp. and SAP AG have discussed merging; and acquisition chatter surrounding Novell Inc., BEA Systems Inc. and others. (At press time, Oracle, which in November announced its final bid at $24 per share, had won support for a buyout from a majority of PeopleSoft shareholders, but PeopleSoft was continuing to resist a sale; earlier this year, Oracle cleared a court challenge on antitrust grounds.)
Could these recent examples of takeover activity mark the onset of the "massive consolidation" in the software industry long predicted by Oracle CEO Larry Ellison? Perhaps. (See "Shrink Rap," page 34.) Many analysts have been expecting consolidation for years, as the software business matures like other industries before it. But even without a rush of acquisitions, the current pace of deal-making presents enterprise software customers with both good news and badand makes planning for those disconcerting events a critical part of the corporate technology executive's job.
"This is a front-of-mind issue," says Vicki Silvera, vice president of information technology at Vail Resorts Inc. The $722 million operator of ski resorts uses PeopleSoft products to run its business, while the software it uses to manage its properties has changed hands twice since Vail first deployed it. "[The consolidation] we have experienced in other sectors is now standard in the software industry, and now that has expanded to the ERP market," she says. "We as customers are forced to negotiate the outcome."
While Silvera is rooting for PeopleSoft to remain independent, she's not ruling out an ongoing relationship with Oracle. "Can I see myself as an Oracle customer two or three years down the road? Possibly," she says. "You have to evaluate the functionality they offer. If Oracle took things in a direction that didn't meet our needs, we would have to look for a replacement."