Faced with PeopleSoft Fading Away, What Are Customers' Choices?

PARIS  
Not a single day goes by without an announcement, a blog post, or a customer’s complaint that drives a further nail in the coffin of PeopleSoft. The recent announcement by HP, an old customer of PeopleSoft, that instead of relying on PeopleSoft, it will build its own workforce planning system came as a bombshell. One of their VP’s expressed his frustration in no uncertain terms, "…we were always hoping that that next PeopleSoft version was going to incorporate the changes that we were talking to that firm about. They rarely did," (full story here ) . End of the line for PeopleSoft doesn’t come any clearer. As HR tech blogger-in-chief Naomi Bloom showed in an excellent piece (look for the post on Product Update :PeopelSoft 9.1 which has been temporarily retired under pressure from Oracle, but read the comments, they are illuminating) PeopleSoft product updates are just marketing gimmicks, like a bone thrown to a dog, aiming at making customers buy into the myth that the product is still being enhanced until it is buried once and for all. Did you really expect that Oracle spent billions to buy a product, universally recognized as better than its own, just to continue competing with it? Of course not, the idea was to kill all competing products (others include Siebel, Hyperion et al.) thus obliging customers to migrate to Oracle’s product, EBS, rebranded as Fusion under the pretense that it is a “new” product combining the best of all its acquired product portfolio. Only customers under the influence of intoxicating substances will fail to see that under the hood of Fusion is good ole Oracle EBS code.
Also to take into account is one of Oracle’s best-kept secrets: a good third of its PeopleSoft customer base is on IBM technology (the DB2 platform). Since the Fusion product will only run on Oracle database, that means these customers will either have to switch technologies to adopt the Fusion application (something most are loath to do, since underlying-technology choices take precedence over the business software that sits on top of it) or they will have to look at other options.

So what are the legions of increasingly frustrated PeopleSoft customers to do? Apart from being mad, which I can understand but doesn’t help much, the choices in increasing order of relevance are the following:

1. Do nothing. You may be surprised by this option (which I do not recommend) but never underestimate the power of apathy that certain customers have. “Unless and until the current product stops fulfilling our business needs why bother?” Seems to be their philosophy. I’d have nothing against this display of the power of inertia, so to speak, but playing the ostrich and waiting until the last moment is a recipe for disaster. In this case, as in many others, it pays to do a little contingency planning.

2. Use a third party vendor that provides support for Oracle's doomed products (JDE, PeopleSoft, Siebel) at a fraction of the Oracle price. Rimini Street is one of them, and Oracle is going to great lengths, not less through litigation, to prevent such services from being rendered. As a customer, don't be intimidated: you've already paid through the nose for the PeopleSoft product and are entitled to get a longer lease on its life at reasonable prices. Why would you continue to cough up extortionate prices until Oracle pulls the plug on life support?

3. Wait for the successor product, Fusion HCM, to arrive and when it does switch to it (that is if your database is Oracle, see earlier point made about IBM users). Isn’t Oracle promising that the HCM Pillar (that’s their jargon) would be as good as PeopleSoft HCM, Oracle HRMS etc.? That upgrade “help” would be available? (something one can expect when two products are made by the same vendor) Well, remember Oscar Wilde’s quip that only those who believe in promises are bound by them. Didn’t Oracle, when it bought PeopleSoft, commit they would support it till Doomsday? But recent developments have shown what that commitment actually meant: a boon for the vendor to further milk the customer without producing much in return, and much angst for the customer. As for that upgrade/migration help it is increasingly clear that it is not going to be a tool but just a vaguely described “guide.” In other words, PeopleSoft HCM customers will have to reimplement a new HCM system. In that case why not shop around? It’s not as if Oracle is the only game in town (yet). There are still plenty of choices.

4. If integration to an ERP system is important to you and you are part of the big proportion of PeopleSoft customers that run SAP for Financials, Manufacturing and other business functions, then start considering SAP HCM seriously. Sure, they are not as sexy and user friendly as PeopleSoft, but, sorry, PeopleSoft is dead, so once you get over your grieving, negotiate with SAP (who are guaranteed to bend over backwards to accommodate you) and sign with them. Now, if your ERP is…Oracle, you need to consider choice number 5.

5. Independent HCM suite: here it depends on your needs: if you’re a purely domestic company then pick Lawson (if in the US only), or Meta4 (if you’re in the Hispanic market), or Northgate in the UK. If you’re considering a SaaS model, then have a look at Workday (a promising product, even if still work in progress.) The larger question here is who will replace PeopleSoft as HR’s tool of choice and it will be the object of another blog post, so watch this space.

6. You may well have two or three separate HR projects, one for an HR system of record, one for Payroll and one for Talent Management. In that case if one of the previous (#4) vendors doesn’t cover all your needs, you’ll have to select one HR SOR, a different TM suite (SuccessFactors or Taleo spring to mind) and, if a single global payroll is not your thing, select a combination of local payrolls.

Whatever you do, learn from your experience and make sure that you pick a vendor that will not over-charge you for every update or imposed migration. And protect yourself with a contract with teeth that considers every M&A eventuality or change in product strategy. Once bitten twice cautious, I’d say. This is no time to be shy about your interests as a customer.

Is Fidelity Still in HR Services Business? Bank of America Ends Outsourcing Contract

RIO DE JANEIRO
Fidelity Investments' HR Services has just taken a big hit with the announcement that their flagship client, Bank of America (BofA), has decided to dump them after a lengthy review in which they compared the option of staying with them to switching to a new provider. The decision which moves payroll, timekeeping, recruiting and benefits to Hewitt (and only keeps retirement with Fidelity for the time being) prompts any observer of the HR technology and services business to wonder what is going on. After all, BofA, was Fidelity's largest and most significant client and the contract was trumpeted with loud fanfare back in 2004.

This is no accident as the project showed that Fidelity's move into outsourcing services was not matched by the required capabilities to ensure success. In particular, the choice of a technology platform has been erratic, at best. First, Fidelity, who had been using Oracle for a long time, decided to have their own technology on which they would offer outsourcing services and in 2003 they bought from IBM Paris-based software vendor HR Access. The next few years were used to implement the system for their own workforce worldwide. Hundreds of millions of dollars were spent on that effort for Fidelity only to pull the plug in 2007 and revert to Oracle for both internal needs and big clients like BofA which continued to cost them a fortune for the honor of using their logo as a major client.

Despite this setback, Fidelity continued with another project, called Global Platform, still based on HR Access but only for Europe, to start with. The secret hope being that what didn't work in the US would, as by magic, work in Europe and the miracle could then be replicated back in the US where the BofA project was still dripping ink the color of blood. In 2008, the awaited miracle didn't materialize and the Global Platform project was shelved at a cost of several dozen million dollars, to be replaced with outsourcing services from HR Access directly.

The problem is that HR Access whose DNA is HR software (or, rather, software services around implementation - a legacy of the IBM Global Services days) has limited knowledge and experience of the outsourcing business. The top managers called in to help (such as Bill Thomas, as Head of Outsourcing, from Ceridian, now with Equaterra; Ignacio Palomera, on the Product Mangement side, from Arinso) all came and left one after the other with little noticeable impact, at least of the positive variety. HR Access is still a software vendor, still European with France representing a lion's share of its revenue and (still higher) costs. Its recent multi-million-euro win to supply the French government with a customized payroll software for all its employees is actually a double edged sword: not only does it mean that heavy R&D investment will have to be made to develop a product that can't be sold to any other customer thus preventing any product capitalization, but it also draws HR Access even farther away from the outsourcing business since most of its resources will be focused on the traditional software business rather than the brave new world of outsourcing services.

In view of these developments it is safe to predict the following :

1. Unless there are some radical changes in the way the business is managed, and the technology strategy clarified, Fidelity's cash hemorrhage is going to continue until hey exit the HR Services/outsourcing business altogether. More cost effective vendors have appeared on the landscape and are stealing Fidelity's lunch.

2. HR Access, which is still an unprofitable business as it relies on a regular handout from Fidelity, will be sold back to either a private equity firm or, more likely, another HR vendor (such as SAP who lost that French government payroll deal, but are implementing an HR system for several million French government employees.) But any sale will have to be done at a loss since any new acquirer will face a serious cost control challenge. In today's globalized world and recovering economy it doesn't make sense to have expensive developers in Paris, France, building what is after all just a payroll and HR admin product for mainly the French market and smaller satelite markets.

3. HR Outsourcing is a tougher nut to crack than previously thought, and the market through 2015 will grow more slowly than the traditional on-premise licensed software or subscription-based (SaaS) model. The reason is that all vendors are still struggling with the dual challenges of how to achieve economies of scale by implementing the Holy Grail of best practices supported by truly multi-instance technology.