Craig Conway: The CEO at PeopleSoft muses on ASP hosting and the ERP vendor’s strategy

Craig Conway: The CEO at PeopleSoft muses on ASP hosting and the ERP vendor’s strategy 04/24/00

Eugene Grygo, InfoWorld

PEOPLESOFT HAS FACED some significant challenges in the last 12 months. It has engineered a complete reorganization, heightened competition in the ERP (enterprise resource planning) and ASP (application service provider) space, and the acceptance of a new CEO.

In September of last year, Craig Conway was promoted to the post of CEO of PeopleSoft after joining the executive team as president and COO months before. Conway is responsible for PeopleSoft’s business operations, including sales, marketing, professional service, customer support, development, finance, and administration.

In an interview with senior editor Eugene Grygo, Conway discusses the ASP hosting industry and the part PeopleSoft plans to play in the market.

InfoWorld: Why is PeopleSoft moving into direct ASP hosting?

Conway: The ASP market is finding us. Customers are anxious to find a way to have the convenience of running their applications outside of their own data centers and holding a company accountable for the delivery of the application and the upgrading of the application over time as new versions are released.

InfoWorld: Why do you think customers want ASP hosting? What are the driving forces behind that?

Conway: When we were evaluating the ASP market, we felt that it would be attractive to small companies that didn’t have the development resources or the data-center infrastructure to run PeopleSoft [software]. And certainly there has been an attraction there.

However, the attraction of the ASP market has been all the way up to some of the largest customers we have and some of the largest companies in the world who look at the ASP proposition as a way of unburdening their data center and their internal resources from running their enterprise applications.

InfoWorld: Do you see a split between the brick-and-mortar companies, in that they are reacting in fear to the possibility of another form of outsourcing [ASP], and the dot-com start-ups, [which are] saying, ‘Well, we don’t have it anyway; so we might as well outsource’?

Conway: I see both kinds of companies extremely interested in outsourcing their applications to a hosting company. Perhaps for different reasons. Dot-com companies don’t have much infrastructure; so [outsourcing is] not only attractive but it may be required. Large brick-and-mortar companies that have data centers and have resources seem to be equally interested, albeit for different reasons.

InfoWorld: In terms of PeopleSoft’s strategy going forward, how important is the ASP model?

Conway: We think it’s going to be an enormous part of our business. We think it will account for 40 percent of our business within two to maybe three years. This is a capability that has become particularly attractive by virtue of networking.

There isn’t any difference to the end-user between accessing an application via an application service provider or via a data center. The access to the application is over the same Web browser that they would normally use internally or externally.

InfoWorld: How important will trading exchanges be to PeopleSoft’s future?

Conway: I think they will be important, as will a lot of other e-commerce and customer management applications. These are applications that are designed to internally improve the efficiency of core functions within your company, from human resource management to finaancial applications, manufacturing and the supply chain.

By the way, the value that a company like PeopleSoft can bring to these e-commerce applications and customer relationship management applications is the full integration of front-office applications to back-office applications, which is not currently the way these applications are delivered in the marketplace today.

InfoWorld: Would you see EAI [enterprise application integration] players as competitors in regard to front- to back-office integration?

Conway: I think middleware providers are, and always have been, transition players in the industry. I see no middleware companies that have been long-term players in the high-technology industry. They never have been, and I don’t think they ever will be.

When the technology industry migrates from one architecture to another, there is a need, for a few years, to use middleware companies to connect old systems with new systems. And during that period, a number of middleware companies gain size and status helping large organizations deal with that. But, eventually, companies complete a migration to a new type of architecture, and there’s not a need for middleware because all of their applications have converted to the new architecture.

As an example, back in 1987, ’88, and ’89, when most applications were menu-driven applications and client/server architecture started to become more attractive, there was an immediate and impressive growth in middleware companies. Why? Because customers wanted to be able to deploy client/server applications but still had to have them integrate with their old applications.

They eventually completed that transition to client/server applications, and everything was running client/server. Middleware companies either went out of business or got acquired or folded into bigger businesses.

But, eventually, no one chooses to use a middleware company if they can help it. They’re using a middleware company because they have products that do not easily integrate.

Over time, as companies complete their transitions to new technologies, the need for middleware goes down. And as companies complete their transitions from client/server architectures to Internet-based architectures, the need for these middleware companies will be reduced. I don’t see them as much as competitors as serving an important but short-term function.

InfoWorld: Do you have a vision in mind of what the world will be like in a year or two for PeopleSoft?

Conway: If I were to describe our vision, it’s to be the world leader in best-of-breed applications in multiple categories, [applications] that can be run separately with other company’s products, including our competitors’, or can be run together in a fully integrated manner.

My vision is that PeopleSoft would offer these best-of-breed applications in three categories: our traditional core enterprise management applications, supplier management applications, and customer management applications.

InfoWorld: What does the breakdown look like for your customers, say, in a year?

Conway: I think all companies, whether they have physical facilities or not will also have e-business operations that make them indistinguishable from dot-com companies.

At one time, having a Web site was a new thing. Then, of course, within three years most companies had a Web site. I think the same thing about of e-commerce technology by brick-and-mortar companies. I don’t think a General Motors or a Ford Motor Co. will be any less an e-commerce-driven company than a Silicon Valley dot-com start-up. The technology is there to allow them to be an e-commerce-driven company.

InfoWorld: What keeps you awake at night, as far as the business, PeopleSoft’s strategy, and thhe competition?

Conway: I think the only thing that keeps me up at night is the challenge today of recruiting and retaining the best people. There’s an enormous amount of opportunities for talented people in the world, and PeopleSoft competes for those people. Our ability to continue to lead the industry is dependent upon keeping those people.

Eugene Grygo is an associate news editor at InfoWorld.

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