“PeopleSoft does not have a product problem in Europe,” insists Craig Conway, chief executive of the Pleasanton, California-based enterprise applications software vendor. What the company’s European operations do face, he acknowledges, is an “awareness challenge”.

Indeed, since the company established offices in Europe in 1992, it has frequently struggled to understand the complexities of doing business in the region. For example, early versions of its financial accounting software lacked robust multi-currency support – a critical shortcoming that hindered intial uptake of the company’s software in Europe.

In the past five years, European sales have grown steadily – but not as quickly as PeopleSoft’s management would like. In the first half of 2002, sales in Europe, the Middle East and Africa region accounted for 13% of its overall sales – not 25% as

Conway announced at the company’s recent European user conference. The actual figure is down from the 14% reported in fiscal 2001, and unchanged from the proportion in 2000.

Strong, home-grown competition is one of PeopleSoft’s key European challenges. The market for high-end enterprise applications is dominated by German software giant SAP, and a host of smaller European companies, including Intentia, Scala, Navision (which was acquired by Microsoft in May 2002), and the Baan division of Invensys, have solid positions selling to small- and medium-sized European organisations.

Another issue is PeopleSoft’s relative weakness in manufacturing software, a product problem that Conway so strenuously denies but independent analysts are quick to highlight – especially compared to SAP.

By contrast, PeopleSoft is strong in enabling companies to manage information about people and relationships, rather than materials and products, reflecting its origins as a human resources management software vendor. However, while European manufacturing companies embraced software automation during the 1990s, the region’s services companies have been slower to do so, limiting the uptake of PeopleSoft products in Europe.

This may change though, especially if greater numbers of services oriented companies in Europe can be persuaded to invest in software to automate people and processes. To this end, PeopleSoft is working with a handful of high-profile companies to increase the appeal of its products to organisations in that sector.

For example, the mobile device client software for PeopleSoft’s customer relationship management (CRM) product was co-developed with German airline Lufthansa and elements of PeopleSoft’s Enterprise Performance Management module were co-developed with French bank Société Générale. These joint development projects, explains Conway, are part of what he describes as PeopleSoft’s “third generation product strategy”.

In addition, PeopleSoft has opened new offices in Brussels, Milan and Munich to improve its sales coverage and released a set of ‘accelerated’ products, low-cost, pre-configured versions of PeopleSoft software tailored especially for the German, Italian, Spanish and Swiss markets. At the European user conference, Conway also announced the availability in Europe of PeopleSoft for Staffing, a newly globalised product designed to streamline the ‘pay-to-bill’ process for recruitment companies.

PeopleSoft’s relative weakness in the manufacturing and supply chain areas may ultimately not be a problem for the company in Europe – but only if it can convince its audience of the company’s undoubted strengths in services- and human process-oriented products.