The Scoop...

Whatever you say, D.A.D.

PeopleSoft is a company that prides itself on its informal corporate culture and sensitivity to employees. "Have fun," "no bullshit," and, oddly, "keep the bathrooms clean" - these are the mantras of Dave Duffield, PeopleSoft's co-founder and chairman. The company he founded in 1987 with software designer Ken Morris is just as quirky. Duffield, whose initials are D.A.D., has endeavored to develop a strong, familial corporate culture. To make employees feel good about working those 14-hour days, he encourages inside jokes and a cultish company lingo: PeopleSoft employees are PeoplePeople, and the company provides them with free PeopleSnacks. If an employee becomes pregnant, the child is dubbed a PeopleBaby and assigned a PeopleSoft number. "D.A.D" has even opened his home to employees for company parties.

Not surprisingly, Duffield himself has become something of an icon. Referred to as "the legendary Dave Duffield" in company newsletters, the paternalistic leader has been described as a (slightly) huggable version of Big Brother. PeopleSoft employees can pick up a "Duffield Bag" at the PeopleStore; marketers use "PeopleDollars" imprinted with his likeness to help customers decide how to allot resources. One former employee even dedicated a book she wrote to Duffield. In a 1999 interview with The Wall Street Journal, Duffield commented, "I will do what's right for the company. If I'm legendary, so be it."

He may not be legendary for long, however. Since 1998 companies such as PeopleSoft that make complex programs designed to encompass all of client's diverse processing needs have watched their revenue growth slide as web-enabled competitors jump into the market. The result for PeopleSoft: a management shake-up and a mad rush to define and implement new web-based strategies.

From HR to ERP

>From its birth until April 1998, PeopleSoft grew into a software industry biggie. Beginning with network-based human resource application designs in 1987, PeopleSoft has moved into the dog-eat-dog world of enterprise resource processing software, or ERP. ERP helps companies streamline human resources, organize their books, and smooth out manufacturing processes. It is also used heavily by universities who need class registration programs. The huge, complex - and expensive - systems must be implemented by armies of systems consultants, which further drives up costs. The company added financial software to its offerings in 1992 and manufacturing software in 1996 (with the purchase of Red Pepper Software, which makes supply chain management applications).

Crazy growth

Competitive undertakings seem incongruous with such a feel-good company, but for years, PeopleSoft prospered nevertheless. Laid-back on the surface, PeopleSoft worked its way up in the profit-rich ERP software market, behind the well-established SAP and Oracle. Between 1994 and 1998, the number of employees increased from 914 to 7,032. And between the company's initial public offering in November 1992 and its peak in April 1998, the company's stock price rose 3,182 percent.

Free-fall

But the cult-like PeopleBliss would not last forever. Like the rest of the industry, the company suffered as sales in the ERP market, which had reached 80 percent annual growth rates in the mid-'90s, flattened out by early 1999. ERP leaders at PeopleSoft blamed the Y2K bug and hesitation among companies more eager to upgrade their hardware than buy new software. But industry analysts disagreed with PeopleSoft's assessment, pointing to market saturation and the tremendous expense and time ERP installations entailed. In addition, many felt that companies such as PeopleSoft weren't adequately tune in to smaller companies' needs. Furthermore, many pointed to Peoplesoft's snail-like pace in adapting to the Internet.

By April 1999, shares were down 74 percent from the year before. Even more daunting is the influx of startups offering cheaper ERP applications over the Internet, which are also much easier to implement.

New business

In a frantic attempt to fortify the business, the company created Momentum Business Applications to run its Research and Development pursuits. The new company was spun off in November 1998, and PeopleSoft CFO Ronald Codd subsequently left his post to head its operations. Back at the ranch, PeopleSoft plans to expand into new product areas, including software for supply chain management, manufacturing, and e-commerce.

From PeoplePeople to UnPeople

As part of a restructuring in January 1999, 430 PeoplePeople became UnemployedPeople, and many of them have complained that D.A.D. and the rest of management did not handle the process very diplomatically. Many employees received final notice by messages on their voice mail, and a few complained that they were not told why they were being cut. One staffer was reportedly out of the country on vacation when she received a call telling her not to bother coming back. Meanwhile, the company disclosed that it may have to restate its financial results for the past three years because of an inquiry by the SEC. As a result, it now faces several class-action suits from PeopleSoft shareholders.

New people

Craig Conway, former President/CEO of OneTouch Systems (and an Oracle veteran), was brought on board as President and Chief Operating Officer in May 1999. The industry veteran was hired to help the company develop Internet offerings, expand into new markets, and introduce a new portal-based strategy for e-commerce called the PeopleSoft Business Network (PSBN). Four months later, David Duffield handed over CEO duties to Conway but announced that he would continue as PeopleSoft's chairman. The change seems to be working. PeopleSoft announced the opening of a new global marketing office which will house the entire 400-person division.

Internet strategies

Leading this impressive rebirth of PeopleSoft has been the company's Internet strategy. The company now functions as an Application Service Provider (ASP), an Internet access center for rented software. A company can store its data with the ASP in addition to using the software and is charged on a monthly basis for the service. PeopleSoft hopes that by entering the ASP market, it will make its software more affordable to mid- and smaller size companies. Estimates suggest that up to 50 percent of software license revenues come from PeopleSoft's venture into ASP. In July 2000 PeopleSoft unveiled a web-based "enterprise software" designed to automate tasks like sales support and managing customer relations. Though the company hopes the new program will signal a rebound, PeopleSoft will still need to catch up to competitors Oracle and SAP.