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March 05, 2005

NewCo: A Proposal for a New University-Centered Technology Company for Oracle PeopleSoft

Back to the Future

Flashback to 1992 or so.

At that time SCT acquired the IA (Information Associates) products from Dun and Bradstreet (read about the history of IA from the biography of John Robinson). After reviewing their acquisition, they told a number of universities that they would no longer support the IDMS product. These were large research universities. That raised quite a ruckus. The way they resolved that was to create a separate software support company focused on support for that product. The company, Pinnacle Software, was privately owned, had rights to the SCT software, hired SCT employees who supported the IDMS product, had an on-going relationship with SCT, and were free to develop other products as long as they didn't compete directly with SCT's product line.

Pinnacle Software did a remarkable job of supporting us and keeping their customer base for long time. They were so successful developing another product line that they were bought out by a Telecomm company. The IDMS product support came back to SCT in 2004.

Oracle and PeopleSoft circa 2005

The acquisition of PeopleSoft by Oracle Corporation provides the higher education community around the world with a unique set of challenges and opportunities. While some will choose to continue to react to these new realities with apocalyptic predictions, the opportunities for the higher education community are numerous. No one knows our needs better than we do. No one has more of an interest in enhancing and extending the useful life of the PeopleSoft applications than we do. The investment in the PeopleSoft suite from the higher education vertical market is significant in terms of the investments higher education institutions make in enterprise software technologies and related services. On the other hand, higher education remains a (very) small market in terms of revenue representing something on the order of 1% of Oracle annual revenues. For those who have worked in the higher education segment over the past two decades, Oracle’s ability to deliver on a consistent and sustained basis within the college and university marketplace has been uneven at best.

The corporate culture of Oracle precedes its acquisition of PeopleSoft. Universities across the country (as well as many other verticals) are 'nervous' and looking for and buying insurance (like 10 year maintenance agreements on existing contracts). This may make sense for some. Like many, I have worked with Oracle for over a decade in higher education. Oracle owns our database environment Case. Above the database layer, Oracle has been less than successful in the application suite within higher education. More recently, my experience with Oracle Corporation has suggested some considerable open mindedness, innovation and forward thinking in working with higher education in marketing, branding, and providing technical and engineering services. Working with Case and a consortium of now more than 50 universities, Oracle's portal framework, and now Collaborative Suite is beginning to penetrate the higher education marketplace and demonstrate value to universities and colleges around the world. The relative success of CampusEAI is due to at least inpart the willingness of Oracle to revisit its strategy for working with and selling into the higher education vertical.

While we continue to look to the PeopleSoft Higher Education Users' Group to work with Oracle to identify broad needs and requirements for the product set, with the support of a number of my colleagues, I am suggesting the exploration of something else. Building on the business case of IA, Pinnacle, and IDMS, there is an opportunity to continue to build on Oracle’s forward thinking collaborative business model, and create a new company to offer services to the higher education marketplace that Oracle supports, certifies, and helps develop. The major differentiator of the NewCo would be to leverage that set of technologies and integration services that while important enough to higher education were deemed as improbable areas for investment of R&D, product development and/or support by Oracle for good corporate reasons. It turns out (see below) there are perhaps a good half dozen areas for initial exploration.

An Initial Exploration

This past Monday, February 28th, Case Western Reserve University invited some 30 universities and colleges to participate in an opening discussion around the core business opportunity outlined above. The participating universities and colleges included private, public, two year and four year institutions from across the United States. The 5 hour conference explored the efficacy of both the business proposition as well as technology drivers like grids and advanced network infrastructure. The outcome of the dialogue is summarized below.

Common Goals

We desire to keep moving the PeopleSoft application forward. We have a common interest in extending the value and the opportunity to leverage our PeopleSoft investments. We continue to have interest in supporting our institutions by driving towards cost savings and cost reduction in our ERP applications. However, most felt that it was prudent to take a defensive posture to reduce risk. While some viewed risk mitigation as the end state, others identified an going interest in the exploration of business opportunities of NewCo.

We have also maintained an open dialogue on NewCo with PeopleSoft veterans, Oracle executive leadership, integrators like IBM, Cedar Group, and infrastructure players like Sun Microsystems. We continue to have expressions of interest from others who may, or may not, see themselves as possible investors.

Eight Core Ideas and Business Propositions

(1) OpenTools for PeopleSoft A community-source orientation to key tools to allow the community to advance and sustain the application forward as Oracle looks forward to fusion and new generation of the application suite and its extension into new areas.

(2) Decision Support Business Intelligence Who better than the University community to better understand the inner workings of our organizational needs. Neither Oracle or PeopleSoft have a stellar track record. It is possible that Oracle may not wish to invest heavily in this area because of the detailed requirements for functional knowledge that is limited to the Higher Education vertical. We definitely need additional investments in the area of decision support and business intelligence for our environment. This may be an opportunity.

(3) Customer Relationship Management . While PeopleSoft and Oracle have "products" in this space, this may be an opportunity as there is value for both our student and our faculty to have a life cycle management tool set to build better customer care and understanding as to needs. It is possible that Oracle may see this as an opportunity for collaboration and partnership in our specific marketplace.

(4) Shared Services where it makes sense. While some public university systems already provide hosted solutions (either outsourced or system sourced), some participants felt that there might be a business and service opportunities not only to provide more robust infrastructure but also an exploration of possible cost containment or savings. We took as an action item to complete an environment scan on this item.

(5) Database Instances (other than Oracle). Perhaps 1/3rd or more of the Universities who use PeopleSoft are using other database systems. It is possible that for both sequel server and db2 server communities may find value in either a business or cooperative effort. To be further explored.

(6) Repository of XML Web Services for Administrative Systems (Accelerators) for re-discovery of business processes. The value of a repository of web services is significant. The value has been validated by the work of CampusEAI and others. As Oracle continues to embrace a standards-based technical architecture that leads to "componentization" (chunks of code that can be used discretely or as part of a bigger eco-system), the higher education community might be very very well served by a formal business offering (or alternatively a more informal cooperative offering) in reusable chunks of code that can be repurposed in differently settings. However, the REAL value of this technical architecture is that makes more transparent the need to revisit or re-discover business processes on our universities. This "process mapping" and "business re-engineering" may actually be a valuable offering in the Higher Education market space that would require domain expertise that Oracle may (or may not) be interested in partnering.

(7) Global Support Center For anyone who has used the existing PeopleSoft Support Center there is a significant probability that the call center (and its personnel) is unlikely to be delivering support in an education-sensitive environment. The call center (by definition) is a generic and commerical user centric enterprise. There is some suggestion that a higher education global support center might have value in partnership with Oracle as a way of building compentency not only in the PeopleSoft suite, but potentially in many of the other current or future offerings for the higher education marketplace. This amounts to an Oracle certified, higher education centric global support call center and solutions initiative.

(8) Student System Data Warehouse . There is no product today in this space. It is critical to develop a data warehouse and reporting infrastructure. Perhaps Oracle will commit to this area. If it chooses not to, this might be a viable business venture for the university consortium to develop as a business offering.

Invitation

We have begun to outline next steps in creating some form of business partnership through various forms of equity investment. We are also validating some of our assumptions as outlined above. This is an open invitation by those interested in exploring the creation of a NewCo on the basis of these (and/or other core value propositions) are welcome to contact me at Lev Gonick

Posted by lsg8 at March 5, 2005 04:46 PM and tagged Bytes 

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