PeopleSoft gets cosy with IBM

In a move likely to obstruct Oracle's hostile takeover bid, PeopleSoft has decided to adopt IBM's WebSphere as its preferred middleware platform.

The agreement, unveiled at PeopleSoft's Connect 2004 user conference in San Francisco, will allow PeopleSoft to deliver software that lets customers tightly integrate applications, the company's chief executive Craig Conway told delegates.

PeopleSoft will integrate IBM middleware and development tools, including components of WebSphere Portal, WebSphere Business Integration, WebSphere Application Server and WebSphere Studio Application Developer, with its portfolio of applications. Customers will benefit from greater functionality and more flexibility, the companies claimed.

To optimise the way future releases of their products work together, PeopleSoft and IBM promised to swap out developers to work in each other's software development facilities.

The two companies will work together on integration technologies and funding for marketing and sales programmes.

"It may be the most ambitious announcement in the history of the enterprise application software industry," said Conway.

The deal, which will require an investment of $1bn for both companies combined over the course of the next five years, was described as "a smart move" for PeopleSoft by Barry Wilderman, vice president of application delivery strategies at analyst firm Meta Group.

By partnering with IBM, PeopleSoft ensures it has a strategy for application integration without having to develop its own products.

Furthermore, it raises the price Oracle will have to pay if it acquires PeopleSoft, added Wilderman, because Oracle would have to dissolve the IBM agreement and remove any IBM software from the PeopleSoft products.

"This is a win-win situation for IBM," said Wilderman, referring to the added support for WebSphere and the opportunity to frustrate Oracle's takeover plans.

Conway refused to comment on the takeover saga, referring to it as "static" and a distraction.