The FUD begins in Oracle and PeopleSoft deal

Creating fear, uncertainty and doubt (FUD) about your competitors in the minds of their customers is a tactic common in the enterprise software industry, especially when you see a significant event like an acquisition that will upset the fine balance of players in a mature and consolidating market. It’s all part of the friendly business mix.

In the wake of the Oracle/PeopleSoft acquisition announcement yesterday, here comes this early attempt by SAP at creating FUD as reported in eWeek:

"The era of uncertainty is far from over," said Bill Wohl, SAP’s vice president for product marketing, in a telephone interview. He said plenty of questions still remain around how former JD Edwards customers will be supported, how the integration of the two companies will proceed and what the long-term plan will be. "All of those questions and uncertainties bode well for SAP, which looks increasingly like a safe harbor in a stormy sea. … We’re dealing with customer requirements, while the others are focusing on legal battles and now mergers and acquisitions."

The turmoil will continue for at least another 12 to 18 months while the two companies complete the merger process, Wohl predicted. "You can’t minimize the amount of work here to bring the two together. We believe this is a market opportunity for us—it’s been that way all along, and it continues today," he said.

He said that even once they complete their integration, Oracle and PeopleSoft will only be "a modest competitor."

FUD is a significant issue, one that can throw a big spanner in the works if you’re not prepared. It comes in many guises, from PR-induced efforts such as press interviews like SAP’s comments, to systematic attempts by sales and marketing teams in local markets to sow the seeds of FUD directly in the minds of local customers, employees and others.

Consider this concluding view by Jim Shephard, Vice President Research at industry analysts AMR Research in a note published yesterday:

This acquisition now makes Oracle the second largest application vendor and a much stronger competitor with SAP. Oracle will now have enough scale to begin to match SAP in development investment, and it will actually have more customers than SAP does. This transaction certainly has the potential to make Oracle a much more formidable applications company if it can capitalize on its size, the collective expertise, and intellectual property of the two organizations. One hurdle for Oracle is to complete the absorption and integration of a huge acquisition without too much confusion, which could impair customer relationships or kill its momentum in the marketplace.

All such commentaries are just the opening salvoes in what undoubtedly will be a major battle for market position and dominance. Effective communication really is key to this, as I posted yesterday on the communication challenges now facing Oracle and PeopleSoft.

Observing developments with keen interest.

Addition: Yesterday, The Register published The PeopleSoft vs. Oracle clash, a good concise timeline and history of the events leading up to the announcement of the acquisition.