PeopleSoft is under fire ahead of the next major update of its enterprise applications suite amid claims that it will force customers to make an expensive shift to a new licensing model.
PeopleSoft 8, which launches next week, will be the first version of the suite accessed through the internet, rather than using client software. Analysts said customers wanting to upgrade to PeopleSoft 8 could be forced to pay based on anticipated use, rather than a per-seat licence.
In a strongly worded report, Giga analyst Byron Miller said: "PeopleSoft is making 600 of its oldest and best customers very angry, and they are talking about litigation."
PeopleSoft has had its latest licence, called Extended Enterprise Licensing (EEL), in place for about three years. Under EEL, a customer acquires a licence that allows it to deploy the licensed applications to whoever it chooses - which could include every employee, customer and supplier, and on any number of servers.
Customers wanting the internet-based functionality of PeopleSoft 8, that are currently using versions 7.5 or earlier, will need to license version 8 as a new licence under EEL terms, rather than pay a lower upgrade charge as with previous PeopleSoft updates.
"Had PeopleSoft continued to offer a fully supported Windows client/server environment for its core functionality, we think a different licensing scheme for the internet enablement would have been justified," said Miller.
PeopleSoft said the facts as outlined by Miller are essentially correct. However, Martin MacKay, vice president of European marketing at PeopleSoft, said Miller "has not grasped the value that PeopleSoft is delivering in version 8". He confirmed that all licensing matters are subject to discussion with the customer.
Seb Grady, vice president enterprise licensing at PeopleSoft, said: "There is no way we are holding a gun to customers' heads."
Grady confirmed that in one case a customer had challenged PeopleSoft's licensing arrangements through the courts. "We've never had a judgement against us about EEL pricing. I believe in one case the judge said it is up to PeopleSoft to decide how it wants to charge for new product," he said.
Nigel Rayner, research director at analyst Gartner, said: "Applications vendors moving to internet products are all struggling to find a satisfactory way forward with licensing. I understand SAP is having some difficulties explaining what is in fact a complex concept for many to grasp."
Customers using client/server products will be supported through to 2003 at the earliest. vnunet.com will report on the launch of PeopleSoft 8 from New York next week.
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