Two days ago in a San Francisco courtroom, an attorney cross-examining an IBM executive whipped out confidential IBM documents that apparently discredited the exec's assertion that Big Blue doesn't fear Oracle's bid for PeopleSoft. We're just starting with the Justice Department's antitrust suit to block Oracle's takeover attempt, and already the fun has begun.
The courtroom by the Bay is going to serve up lots of salacious insights into the big software vendors' business practices. But technology end users -- including practitioners of business intelligence -- have a lot more than entertainment value at stake in the Oracle/PeopleSoft saga.
The business technology world is a murky one. It's impossible to foretell the ramifications, good or bad, when there's a shift in the overlapping tectonic plates of the IT vendor landscape. But when it's some of the biggest structural features of the technology horizon that move -- as seems to be the case more and more often -- you can be sure there'll be some fallout.
Oracle and PeopleSoft provide the information that makes BI possible. Both companies' systems act as the data reservoirs that feed analytic and reporting tools, and both companies offerings help shape users' process management strategies. (As the larger of the two companies, Oracle has been able to build out its own BI tools. PeopleSoft, generally speaking, has tended to partner with third-party vendors like MicroStrategy and Business Objects for its BI front end.)
For BI practitioners dependent on PeopleSoft applications, concern about an Oracle takeover of PeopleSoft is entirely rational. The issue for them is continued support for their investment. Oracle's detractors -- who include Oracle's various competitors and other interests aligned with PeopleSoft -- predict Oracle will cease to support PeopleSoft technology in the event of a takeover. Oracle's defenders say the IT applications giant has little to gain from alienating PeopleSoft's customer base. Speaking more broadly, they also say the market will best dictate the most advantageous outcome for everybody.
But Oracle's swashbuckling attempt to grab PeopleSoft is part of a trend that should matter to more users than just those who are part of the PeopleSoft customer base. IT departments can mitigate their companies' vulnerability in takeover situations by refraining from too heavy a dependence on any one vendor. But it's an inescapable conclusion that when the vendor landscape shrinks -- as happens when merger and acquisition activity heats up -- it gets harder to do this.
This is about more than Oracle and PeopleSoft and the Justice Department. It's about flexibility in IT decision-making. It's stunning how often hardline opponents of antitrust activity, who profess to appreciate the free market more than everyone else, miss the underlying dynamic that makes the market work in the first place: A successful market requires competition among suppliers to create options for buyers. When you reduce competition, you reduce options, thereby reducing benefit, in terms of both price and innovation. I sometimes think these facts are so fundamental, so basic, that hardline ideologues are incapable of grasping them.
For most BI practitioners, there will be no IT cataclysm if Oracle should win its case and then succeed in a bid for PeopleSoft -- the latter of which is an entirely different issue driven by the equity markets rather than by the courts. And generally speaking, M&A activity is a good thing most of the time. But it loses its value when the competitive playing field is so reduced on the vendor side that user flexibility is being driven out of the system.
It's a murky line that lies between when the Justice Department should interfere, and when it should not, and everybody can decide for themselves where they think that line falls. But there's no way around this fundamental fact: A tighter IT vendor landscape makes for less flexibility for end users. So set up your seismic monitors, and hold onto your cash with both hands. We might be in for a ride in San Francisco.