Feds begin preparing for Oracle, PeopleSoft merger

With the announcement today that PeopleSoft Inc. has agreed to Oracle Corp.'s takeover bid, federal IT leaders can begin to act on plans they drafted during the last 18 months as the two companies staged a protracted courting dance.

"It gives us a little bit of finality so we can make decisions," said Jerry Horton, CIO for the Mint, which has long run PeopleSoft applications.

Oracle will pay roughly $10.3 billion for the Pleasanton, Calif., enterprise resource planning vendor. The companies want to close the deal by late January.

For now, Oracle is vowing to maintain PeopleSoft products. "We intend to enhance PeopleSoft 8 and develop a PeopleSoft 9. We intend to immediately extend and improve support for [PeopleSoft] customers worldwide," Oracle CEO Larry Ellison said.

About 25 federal agencies run PeopleSoft applications. The interagency Joint Financial Management Improvement Program has certified PeopleSoft and that certification will be valid for two years.

In the months preceding today's announcement, the prospect of a merger led federal IT officials who oversee PeopleSoft and Oracle systems to prepare for the options they face: keeping their PeopleSoft systems, upgrading to Oracle software or some new platform from the combined company, or moving to another ERP systems provider.

Nat Heiner, chief knowledge officer for the Coast Guard, oversees a major PeopleSoft human resources project. "During the publicity of this prospective acquisition, the Coast Guard spoke with appropriate parties in both Oracle and PeopleSoft and satisfied itself on taxpayers' behalf that the government's major interests and investments would be properly protected," he said today.

Heiner's statement reflects the views of officials in many of the agencies that run PeopleSoft financial and HR applications. Most said they will stick with their PeopleSoft systems?at least in the short term?to minimize systems disruptions and control costs.

The Mint's Horton said he and other IT officials at his agency will wait to see what Oracle offers PeopleSoft customers.

"We will talk to them as the merger starts to happen. You are talking about a long-term merger. This is not going to happen overnight," Horton said.

He added that it remains to be seen whether Oracle will combine the PeopleSoft human resources and financial apps with their Oracle counterparts or maintain them as two separate packages.

"They are not going to be able to merge the packages overnight, and then we have to see what they are going to do with services and maintenance," Horton said.

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