For one longtime PeopleSoft customer, last year's Oracle Corp. takeover came at a particularly awkward time: the Center for Remote Enterprise Systems Hosting Inc. (CRESH) based in Sioux Falls, South Dakota, was in the process of spinning out from Dakota State University, and was about to sign the first commercial contract for its hosted PeopleSoft applications services.

Suddenly, the fate of the software line CRESH had built its entire business around was in doubt. CRESH Executive Director John Webster wondered nervously whether Oracle would live up to the support promises it made during its acrimonious, 18-month fight to buy PeopleSoft.

Eight months later, on the verge of Oracle's first OpenWorld user conference addressing its enlarged base of applications customers, Webster says the transition to Oracle has gone relatively smoothly. The big test will come over the next few years, as Oracle attempts to mesh its profusion of heterogeneous applications into one unified line, codenamed Fusion. Still, the early indications are that Oracle will be sensitive to PeopleSoft customer's needs, according to Webster.

"The integration has been better than anything I heard," he said.

Oracle is still selling the PeopleSoft licenses CRESH needs, and executives all the way up to Oracle's top management echelon have reached out and responded to customers' questions and concerns. Oracle has helped CRESH connect with those in charge of areas that touch CRESH's business, including executives in its SMB (small and medium business), On Demand hosting, education and public sector units.

Webster says he hasn't been pushed to switch his company's focus from PeopleSoft applications to Oracle's own E-Business Suite. Meanwhile, Oracle's takeover doesn't seem to have affected the willingness of CRESH's customers to commit to a PeopleSoft deployment: Clients take the attitude that as long as whatever is on the front end works, what's happening behind the scenes is irrelevant, Webster said.

Nonetheless, PeopleSoft's new ownership has prompted some changes in CRESH's operations. The company is migrating its database backend from SQL to Oracle. While PeopleSoft had strong technical ties with SQL, it's clear that supporting its own database will be Oracle's priority, and making that switch seems more prudent than fighting it, Webster said. He's also impressed with the functionality of Oracle's software, which he calls the best database product on the market. Oracle is offering incentives to make switching a financially attractive option for CRESH.

Webster is also preparing to shift from a Microsoft-based infrastructure to a Linux-based one, likely supported by Red Hat Inc. He expects that change to better position CRESH for the coming Fusion migration, and to align it with general IT industry trends toward more open systems.

He's resigned to dealing with some Fusion turbulence. "It's going to be major migration, but I think that Oracle understands enough about the pain of migration that they're going to make it as painless as possible," Webster said.

CRESH is a relative small fry among Oracle's customer base: The venture's two dozen customers mostly comprise educational institutions contracting for hosted application test beds to be used in IT training classes. This year it separated from Dakota State University and began offering commercial, production PeopleSoft ERP (enterprise resource planning) deployments for education and public sector customers.

Its modest goal is to eventually support a handful of midmarket clients and generate a few million dollars a year in revenue. Still, the company's unusual market positioning and Webster's willingness to speak publicly about his experiences with Oracle may help CRESH attract extra attention from Oracle executives eager to keep a vocal customer happy.

"We've been told that senior management, all the way up to Larry [Ellison, Oracle's chief executive officer], know what we're doing and they want this to work," Webster said.

Oracle's announcement last week of plans to buy Siebel added to Webster's certainty that CRESH is casting its lot with a vendor serious about becoming the dominant force in ERP applications. As a hosted software provider, Webster is hopeful that the deal, which brings to Oracle Siebel's CRM OnDemand service and management team, will help Oracle further improve its strategy for tapping customers looking for managed application services.

His one concern about Oracle's consolidation mania is that it will increase software prices by curtailing the number of vendors among which customers can comparison shop. He's also leery of what reduced competition will do to research and development advances. Still, Webster points to software's great monopolist, Microsoft Corp., as evidence that even a dominant giant can still innovate, as he expects Microsoft to do with its forthcoming Vista update, formerly known as Longhorn.

"Truth be told, I know the future is going to be a bit bumpy," Webster said. "But from my perspective, [Oracle] brought the right talent on board and has done a great job of making it work."

» posted by abennett

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