Porr lll lmPiementing btroregy

txercise: Tronsition ot PeoPleSoft

INSTRUCTIONS

Readthecaseintlrisexercise.IdentifydataftomthecasetotepfesenteachSinthe?_s Model Wdte the iJ";;;;r in ther";;, b.* under rr6011snt''-and hand in to

your instructor as instructed'

ProprSort, tNc.

eopreSoft, Inc. is a.cahfomiao":"1 ':jT::':"":.0^iil# #,..1iX';Ti'jl*:lt#-eooleSoft, Inc. is a calrtorrua-Dase(r 5urLwd";";;;;*g, materia* managemeot, distti-

p"irr ^1""ta*ated.softwar",P"*T,:::3:- o,rr h'man resources. on an avet ge, a

ffi ililHlffi J;":;;';"ff;n""-"':g:,Hi:':""ff i'n;H:Tfi '6*r*i:ffi "ffi"i::ffi '#::'.';:T#;;';";&;'o:**or1'to/obe'lween1ee0tj:ttffTJ":"":::;;d8

were $1'3 billioqiz ti-"' that or 1ee4

Enterprise Resource Plonning lndustry

PeopleSoftisoneoffoutmajorql^r=T.se$15billioo":..?o.'.fesourceplanningsoftware(ERp) industry. Th. ;;;;;.1 e. Sen ei'"f C.r,,r*r, O.""it Corp', and Raan Co' The F'RP

industry provides the progtams that drive uu.*.*;ons:,6nancial softwate for accounhng'

humao resource programs for petsonno "Jriitirtr"don, and manufacturing packages to auto-

mate productio", *iti a view toimptoving efficiencies all aror:nd' uket of

Theiodustrysawbadtimescteepupsuddenlv.W-hileanalystswetefotecas0ngamzg52 billion in ERp sales by 20a2, as,h" y#;;dO ;;;;.1*''d, firms began focusing on Y2K

issues and the market sa". sales taperinq "ff A;'Elb *; :-t-,":f #;;tffJJJffi"|73;-

:lir*g*'ry**:*r::":"f'.i"S:;:$'ktij1,T:.:;:;*;;""ileindus.tw'Revenueftomnewproductsalesfell'60%andthestockpdcethatwasapproaching$60a

.iT;ntn#lTytri:1:""1'JJfr I3[:*::q:::::,::*i,l:::1ffl lT;"H#r' it ,irr."i.s. \flbile its main customerc are midmarket---compafles

annualreveoues-oncleandSAPweretrlngtoenterthissamemarketsegmenl

PeoPleSoft's Origins

DavidDuffield"formerlyasalesexecudveatlnternationalBusinessMachines,sawaooPporruiltyto develop ai"or-r"Iffi,; il;-["k il;d""'Pcs to a bigger comPuter serving the whole

officp. He f"""a"a nt-"p*oft in 1987 J;;;;sofware a"f,go"'' Ken Morris' and profited

&om the sirift ftom mainftame .o*n.rorii"r" ;;t."g. PeopdSoft pioneered business mao-

agementapplit"tioi;b1';; oo "n

uo-j';;;;;t' "ia *" the first comPaoy to do so ustng

MicrosoftWindows' The number or tnrnr{"L ;;;;"t g1'41n 1gg4 to7 '032

in 1999'

124 Session I5 Strotegy lmplementotion Using the 7-S Model

Tikemostsoftwarecompanies,Peopldsoft.builtanrnforrnalandsensitivecofPorateculture.David A. Duffield becas:e a legendary, .t.r .J, ng*: *ie- his company' His initials' DAD'

suited him ,ppropr1a,"ty for hi-s 'olt' H" 'o"t-tli schmoozed with workers' and ^

cotniPa{ty

rock band was named ,i., t"t -*"

R oing D"t"'' Employees see him as easy-going aod not a

tvoicai ctro. The company developed i* o*o .o*p*I ilg: where people ate comPany funded

'#."it*t^*tJ;""a'iopp"aat-thecompaoy"PeopieStore'" !

The offi.ce sometjmes Las a f'n, ..theme j-t; "L"rphere.

Nerf battles sPoataneously break

oul There is no dress code. Manag.* ao ooi i"o" ,."r.'t*i"r. Giaot Posters of smiling employ-

.sslinethehallwaysshoutiogoutmessagessuchas'Justt'ytoe"tmetoleave!"Duf6e1dsftesses that the compaoy is more than iust;t*;;";"y It * abolot havrng fun and having a

heart. He tras penoaally given over $200 mit'onio h"tp stray fogs a'd cait' At 58' Duffield

considers hitnself a f*oily;"' He has seven children' ofwhom fow are adopted'

The company h";:.;;"d, "" " prrrr"sophy that shuss bureaucracy. Executives answer

thejr own phones "od

*rit their own letters. et!loy.., are eocouraged to say what they think

and make important d."irioo, without A"q.r.rrtty'gol9--t9 othen foihtlp' 'Don't ask fot per-

mission, ask for forgiveness if something go".'#oo[" is a company belief' The staff often

wotks 7'-hour rveeks. peopleSoft also has -;;;.;;.

benefits iack"ge and employee stock

purchase plan. Employe"' '"t"it" " ""*P;;;;; to use and "it ftet to telecommute from''

hOme. u^*-,, 'T!'p .^mhcrtv sDafgs nO

Duffieldsaysthecompanv,smln.soiristokeepitscustomelsh"ppy.Thecompanysp:expense for thar y";;; oo.-thir6lof tl" .o.r,p*y's 1,000 .-plovt"t ate dfuectly involved in

mstomef sennce. >omedmes, the effon g; ;.;"'; in: J+ or a"ry, such as wheu a Peoplesoft

representarive helped a trlori&-bared companr get back in business following Hwricane Andrew'

The company had to u"r. ir, ,yr,"*,p *a-ffig;y ,h"."a of the year' The PeopleSoft tech-

nician even flew back to Miami on chrirtt r", o"y f.irt q make-sure things went smoothly'

The company's persoonel policies *" ."".ia!ted family friendly' Ioo' Fifq'-eight percent of

oew peopleSoft hires "o*" thioogh * "-.pf"y"t

referral "toitt progflrn that actively eflco'r-

ages worker, ,o ,."rL Jtir.", "ld f"""d:.;;H"rat *tr., cheryl"helped found Peoplesofg

and his brother, son and daughter ;11 q/qrk tere. Dozens of m"tied cot'pltt and relatives work

within the company ranlp' The com-P-atry has a "Bting your pareots to work" *t' --'^',

Through it opiJ]"*nl, D.rf6^eld - iorrio"a",lat the key challenge *us 1st'rining their

corporate culture. ":ft:

,il ;;;;* ;"tbusiasm of the wotkforce 'i something he would

oot sacifice in striving for the u.rt po.riui. to*th. 'jotnel companies would kill for the kind

of commitrnent w'e have--and it * printanty?; l" the cultue o'r tnt company'".HoweYet' as

thecompanygewrapidlyaodthe.numb",of"*ployeesfose'.rnanynelil/comersdidaotfeelasmuch a part of the family as the older .-il;;;ki. ru. rapid growth hurt products too' The

designers fro* i,tt-to ttsources *d d"i;'";;";; *"""r"t*?,,g became focused on their

own areas, and the products each gtoup Pt"il;A "ot toott atkJ and work together as well

". tl.y should fo, ""

i"ttg'ated management software offenng'

.There were other intemal problems. ;;;_l."pleSofiptograms !'Saf,^lo increase' and

customefs started complaining of poor ,"*i.!. 'nvhen you'tt q:*i"g at 80 to 90 perceot ayuat'

,you cao *"t" -i"t"U.|l O"?na.i ,rid. "Th:; g., """i*a ,,i" Wtlo gto*th slows' problems

b.go to surface'

Port lll lmplemenfing Strotegy r25

Confinued Growth

The acquisraoas of otler sofrware companies supported PeopleSoft's growth. In 1996, Peopl.e-Soft acquired Red Pepper Software, a specialist in advanced manufacturing planning, but manythought that PeopleSoft had overpaid for it. Duffield, kept the two organizations separare in or-der to protect Red Peppers brand idenaty and also due to his concern about the impact of theacquisi.tioa oa &e compaty's corporate culture. Howevet, the communicadon between the twocultwes \Fas v€f,v poor and at dmes an outside public relations firm acted as a go-betnreen. In1997, &e comgaay acquued Campus Solutions Inc. as part of its strategy fot enteringthe highereducatios applications marker In October 7999,it agteed to buy Vantive, a money-losing makerof software used bv companies 1s improve customer service, palng a 60o/o premium. Analystsfelt that PeryieSoft aeeded to quickly integrate and tum that company around to avoid a neg -tive impact-

In &e iadestr,r, ERP firsrs are looking to diversify. SAP has been undertaking major reor-xgd i5 *i*ing at small clients too. Oracle Co1p., the wodd's second-largest independ-

ent softtra€ coapaay, also produces the Oracle database and a range of other software tools.Meaaurhile,J. D. E&ards, a new' company that entered the ERP market in. 1997, has captured a

significaot shere of rhe mid-matket.Askd about p€ststent rumors that PeopleSoft was for sale. Duffield ad:nits that selling the

comPa$y looked like a good idea six or seveo montl ago. However, as PeopleSoft's largestshareholdec, be says that is no longer the case. He did confifln that the company was activelyseeking a ae\e CEO to lead the company in the new environment.

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