Note: Just last week, PeopleSoft announced its decision to replace CEO Craig Conway with the company's founder and original CEO, Dave Duffield. This move will likely ease the way for Oracle to acquire PeopleSoft, perhaps resulting in a more smooth transition and a better outcome for PeopleSoft stakeholders.
This case illustrates the power of a coordinated PR response to a crisis situation. It's clear that PeopleSoft's communications plan generated goodwill and strengthened its position in the marketplace.
With the stage set and the battle lines drawn, PeopleSoft set out to deliver its message in a variety of voices. The company used a wide range of customer testimonials, the news media and even the government to restate its key points and to keep them in play in the media. This strategy effectively positioned PeopleSoft in a positive way, simultaneously depicting Oracle negatively.
For background, see Part 1 of this case study.
Situation Summary
In the year following the initial takeover attempt, Oracle made two more offers in an attempt to take over PeopleSoft; both of them were rejected by PeopleSoft's board of directors. In spring 2004, the Department of Justice filed an anti-trust suit against Oracle, joined by 10 states' attorneys general.
Meanwhile, PeopleSoft was making sure that its customers felt confident, and it continued to manage the successful completion of the merger with JD Edwards. Its public relations goal was to keep positive messages in the public eye without appearing to be desperate or defensive.
Customers
PeopleSoft, in an innovative move, posted a compiled and carefully edited list of quotes from its current customers in a testimonial style. This list of quotes furthered PeopleSoft's messages in powerful and convincing ways.
For instance, Fujitsu America's Glenn Marfell says, "Several years ago we chose PeopleSoft over Oracle based on their dramatic lead in product quality and innovation…. We would never move to an inferior Oracle product."
Alcon's Dr. Bob Brobst says, "We fully support the PeopleSoft/JD Edwards merger."
According to National Grid USA's Kwong Nuey, "We're very pleased that PeopleSoft rejected Oracle's offer."
"It's clear Oracle's failed attempt was intended to eliminate its top competition," adds Peg Nicholson of Acushnet Company.
And, finally, Air New Zealand's Chris Alderson says, "Even if the upgrade to Oracle were free, there would be unpalatable implementation and training costs resulting in no benefit."
This approach was completely consistent with PeopleSoft's overall marketing approach, which features many customer testimonials and customer stories. These customer stories and testimonials can be found in not only PeopleSoft's sales collateral but also the company's Web site and its annual reports.
The objective of this tactic was to convince not only PeopleSoft's investors that PeopleSoft's customers supported the rejection of the offer but also stakeholder audiences—by delivering compelling messages of unity and confidence:
- Other current customers, who perhaps doubted the company, may have been swayed by the opinions of the quoted industry leaders.
- Potential customers would be assured that PeopleSoft was viable and offered a quality product through the product testimonials embedded in the messages.
- Investors and potential investors were assured that PeopleSoft's product was not at issue.
- The media had access to ready-made quotes from customers for their stories.
Even the Department of Justice, in its anti-trust suit against Oracle, said this about the PeopleSoft customers whom it interviewed: "customer after customer…gave testimony to support the government's case."
Third-Party Vendors
PeopleSoft's business relies on savvy third-party vendors that can be the primary local contacts for customers during implementation and for routine maintenance.
Those vendors followed the progress of the takeover attempt and kept their customers informed of the situation on their Web sites. Some even started online forums where PeopleSoft customers could talk to each other, promoting communication that was not only open but also entirely outside of PeopleSoft's direct influence. And, generally, these sites were positive and constructive.
The News Media
In positioning PeopleSoft and its CEO as the David to Oracle's and its CEO's Goliath, PeopleSoft's PR department provided the news media with a ready-made classic story, with Oracle as the "big-bully bad guy" and, by default, PeopleSoft as the "underdog little guy."
As a result, ABC News reported that Ellison's strategy was to "essentially annihilate PeopleSoft, dumping its employees and products, and merely keeping its customer list." The New York Times reported that Ellison said "there would be no 'integration risk' because he does not intend to attempt any integration." AMR Research summarized that Ellison's strategy was to "upgrade the PeopleSoft customers to the next release of Oracle, a task that isn't nearly as easy or painless as Oracle is trying to make it sound."
PeopleSoft was even able to get a few of its other key messages out in the media as independent observations, such as the following, in Start Magazine: "PeopleSoft's acquisition of JD Edwards is a testament that some mergers are actually a benefit to the industry and not just something that is done to make shareholders happy."
States' Attorneys General and the US Department of Justice
Oracle's persistence, along with the interest of the media, got the attention of the government. The Department of Justice interviewed Oracle's and PeopleSoft's customers and employees and performed industry assessments.
It filed suit to block the merger, releasing a statement in which Assistant Attorney General R. Hewitt Pate said, "The result of the merger would be higher prices, less innovation, and fewer choices" for customers.
Ten states' attorneys general joined the suit, releasing statements as well and getting additional media attention in those states. Whenever the states expressed support for their positions, they were indirectly expressing support for PeopleSoft.
For instance, the Attorney General of Michigan, Mike Cox, said in a press release dated April 7, 2004, "I will fight to make sure that Michigan businesses and consumers aren't at the mercy of those who seek to evade our antitrust laws for their own unjust gain."
Here again were additional independent voices defining the situation in PeopleSoft's favor. Moreover, these press releases, with the logos of states' attorneys general and the Department of Justice, appeared on PeopleSoft's Web site page, under Chronology of Events—a powerful visual indication of independent support for PeopleSoft position.
Conclusion
There are two outcomes in this saga. First, the most important to PeopleSoft is the legal battle, which remains unresolved at the time of this writing. And second, even though the courts initially ruled in favor of Oracle in September 2004, PeopleSoft's crisis communications strategy was sound, and the implementation successful.
So much so that Start Magazine named PeopleSoft one of its Hottest Companies of 2004 for the second year in a row. Which is, of course, very cool.
