Oracle layoffs spark fears of support gaps

Von Marc L.

Oracle Corp."s layoff and restructuring plans following its acquisition of PeopleSoft Inc. are raising concerns among PeopleSoft customers as the employees they"re used to working with vanish.

Since the US$10.3 billion transaction closed earlier this month, Oracle has revealed plans to lay off 5,000 workers, primarily from PeopleSoft. And although Oracle executives assured customers that about 90 percent of PeopleSoft"s support and development staff would remain to avoid service disruptions, several users said last week that they"re already finding the transition somewhat problematic.

Of 17 users interviewed last week, six were experiencing a negative impact from the layoffs. Three others are in limbo, having had no contact from Oracle, and one is simply wary about the changes in general. The rest said they have been unaffected so far.

The loss of long-time PeopleSoft staffers was the most serious problem the users had encountered.

"We"ve found that the more our representative knows about us and the applications we are utilizing, the better the rep has served us," said Dave Richards, CIO and treasurer at Great Falls, Mont.-based Pacific Steel and Recycling Inc.

The company runs PeopleSoft"s EnterpriseOne ERP software and has just lost its account rep -- someone who had spent time at Pacific Steel"s headquarters to learn about the business and the software used, Richards said. "When a new rep comes in, we will have to start this process all over."

Facing disruption

Richards isn"t the only one facing disruption. After it lost a key PeopleSoft marketing representative at the same time that top PeopleSoft executives left, Palmer, Alaska-based Matanuska Telephone Association Inc. put a planned upgrade from PeopleSoft World to EnterpriseOne on hold, said business systems analyst Gary Riley.

The company is now "waiting for the smoke to clear and our executives to have a better comfort level," he said. "We are waiting when we need to be moving forward."

Other customers said that their future with Oracle remains in question.

Agri Beef Co. in Boise, Idaho, hasn"t had much communication with Oracle during the past month, aside from a series of e-mails announcing "another farewell from another PeopleSoft friend," said Casey McMullen, director of information systems. "My in-box is full of "Farewell, it"s been nice working with you" e-mails."

The beef supplier runs Enterprise financial applications, and McMullen said PeopleSoft had sent a team in to study his business before that implementation.

"Those people worked shoulder to shoulder with us, above and beyond the call of duty to forge a long-lasting business relationship," he said. "Now those people are pretty much gone." McMullen said he isn"t sure whether he will continue using Oracle to support his applications.

Oracle officials declined to comment for this story, pointing to public statements the company has already made about the layoffs.

The decimation of PeopleSoft"s upper echelon has been something of an issue at Denver-based staffing company Remy Corp., a PeopleSoft Enterprise customer.

The departure of such highly placed PeopleSoft executives as President Phil Wilmington and Chief Financial Officer Kevin Parker has led to "a little bit of worry," said Andrew Albarelle, principal executive officer at Remy.

Albarelle, who is generally upbeat about the merger, is waiting to be assigned a new high-level executive sponsor from Oracle -- something he expects to happen in the next month.

That customers are already feeling the pain of a personnel transition is no surprise, said David Dobrin, an analyst at Cambridge, Mass.-based consultancy B2B Analysts Inc.

With the layoffs of an estimated 52 percent of PeopleSoft"s employees -- many of them with customer-facing jobs in consulting or presales -- Dobrin said he doesn"t know whether Oracle can deliver on the promises of continued support to its new installed base.