PeopleSoft's Ex-CRM Leader Surveys New Licensing World - InformationWeek

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Software // Enterprise Applications

PeopleSoft's Ex-CRM Leader Surveys New Licensing World

The new CEO of on-demand app-renter Coremetrics says fewer companies want to buy big-fee, complex software.

Industry trends and a desire to lead a company pulled Joe Davis from his post as general manager of PeopleSoft Inc.'s customer-relationship-management division late last month. He's now CEO of the fledgling and privately held Coremetrics Inc.

Davis has converted to hosted on-demand service, in which companies rent software as needed. Coremetrics, a data-warehouse and -analysis company that collects and monitors millions of bytes about consumers clicking their way through retailers' Web sites, is benefiting from the trend. The information is collected and stored in a giant data warehouse for clients such as Eddie Bauer, Victoria's Secret, and Williams-Sonoma. Coremetrics will continue to support its retail customers, but Davis is putting a premium on contracts with financial institutions. The company recently signed a deal with Bank of America.

Major software companies Oracle, PeopleSoft, and Siebel Systems are surviving on their maintenance revenue, as new licenses are on the decline. Acquisition is one way to gain that new licensee revenue. "The days of large contracts have gone," Davis says. "You used to see very large deals. When Siebel grew like mad, you would see 10 $10 million deals in one quarter. It rarely happens anymore."

Today, $1 million deals are disappearing because customers no longer want to write huge tickets for software that takes six to nine months to implement--and even longer to see a return on their investment. Besides, Davis says, "I really like the hosted model because it enables [Coremetrics] to focus on the business instead of every quarter worrying about closing the big deals to make quarterly numbers."

The fact that PeopleSoft is under siege by Oracle didn't affect his decision, Davis insists, but he admits his exit came at a turbulent time for PeopleSoft as Oracle continues its hostile takeover bid. "I don't think it will happen," Davis insists. "PeopleSoft has done a pretty incredible job fighting off Oracle. The Department of Justice and the European Union will make it very difficult for Oracle to proceed."

Davis, a bit surprised that Oracle CEO Larry Ellison didn't walk away from the takeover when the government declined to approve the move, believes PeopleSoft's CRM division would survive if the acquisition goes through.

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