Will IBM beat Oracle to PeopleSoft?

IBM Corp. and PeopleSoft Inc. announced yesterday a $1 billion alliance to integrate IBM's middleware with PeopleSoft's enterprise application software.

Executives unveiled the agreement at the PeopleSoft Connect user conference in San Francisco just weeks after a federal judged cleared the way for Oracle Corp. of Redwood Shores, Calif., to pursue its $7.7 billion hostile takeover of PeopleSoft.

"This is the largest and most significant agreement that PeopleSoft and IBM have ever made," said Craig Conway, PeopleSoft's president and chief executive officer.

PeopleSoft of Pleasanton, Calif., will standardize on and integrate its software with IBM's WebSphere platform. The two companies will market joint solutions and open a business process interoperability lab where they and other software vendors can develop and test solutions.

The agreement has helped fuel speculation in the business press that IBM of Armonk, N.Y., might become PeopleSoft's "white knight" and acquire the company with its blessing. The two companies have denied there is any merger in the works.

More than 65 civilian agencies and the Defense Department run PeopleSoft software, according to the company.

With more than $900 million in prime federal IT revenues, IBM ranked No. 11 on Washington Technology's 2004 Top 100 list.