The recent alliance between enterprise software company PeopleSoft and technology giant IBM may qualify as one of the deepest and shortest that has ever been agreed; or it may prove to have been the final, inspirational move by the ousted CEO of PeopleSoft, Craig Conway.

The details are still emerging, but the two companies have agreed they will invest as much as $1 billion in a new project to underpin PeopleSoft’s application suite with IBM technology.

	Craig Conway

Even in normal times, this would be a very significant deal. PeopleSoft’s plan is to re-engineer its entire applications suite to run on an integration engine, namely IBM’s WebSphere. In this way, PeopleSoft’s suite will become a service-oriented application, in much the same way that SAP’s products are now all driven by its NetWeaver integration suite. WebSphere already plays a key role at the core of the JD Edwards suite, also now owned by PeopleSoft.

But there is a problem. If Oracle is successful in its takeover bid for PeopleSoft, which now looks increasingly likely, it will immediately kill the deal. It has its own plans and they certainly don’t involve WebSphere. Even now, the engineers on the PeopleSoft WebSphere project must be wondering if their work will soon be ripped up.

Furthermore, the further the engineers get with this huge task, the harder it will be to undo. In a sense, it could even act as kind of technical ‘poison pill’, making conversion to Oracle’s middleware products expensive.

Conspiracy theorists may even see the agreement as an attempt to lure IBM off the sidelines and take a stake. If Oracle does take over PeopleSoft, it will mean that the four most popular business applications (SAP, Oracle, PeopleSoft and JD Edwards) will be in the hands of just two suppliers who see no significant role for IBM’s critically important WebSphere product.