Situation Summary
Oracle made its move when PeopleSoft was in the process of completing a friendly acquisition with JD Edwards, a smaller competitor in the market. The deal secured PeopleSoft's position as No. 2 in the enterprise application business, and Oracle, which had been in the second spot, didn't want to be third.
Just five days after the acquisition agreement was completed, Oracle made a $5.1 billion hostile bid to take over PeopleSoft. The JD Edwards acquisition was completed in August 2003.
Ensuring Consistent Messages
As soon as the Oracle takeover bid became public, PeopleSoft made the decision to get its messages out quickly and clearly. In addition to a slew of press releases, interviews and conference calls, PeopleSoft ran advertisements in national publications hitting its message home, all in the first few weeks of the takeover attempt.
But the most important and most innovative delivery of the message was through the corporate Web site. PeopleSoft had customers worldwide, so its Web site was really the only constant in its message-delivery system.
A special section was created on the PeopleSoft corporate Web site that organized and presented all the information about the Oracle situation. Even the title of the special section, "Board Rejects Oracle's Unsolicited Offer," delivered a message. PeopleSoft listed a chronology of events, which by itself told a story through the use of headlines appearing together:
- PeopleSoft's "The Facts Speak for Themselves" Ad
- Copy of First Amendment Complaint
- PeopleSoft Expands Lawsuit Against Oracle
- Second Amendment Complaint Against Oracle
- PeopleSoft Comments on Oracle's Unsolicited Tender Offer Results
Visitors to the site would have no doubt what PeopleSoft's position.
There are multiple ways to get to the site: through the home page, Investor Relations, and News and Events. PeopleSoft did not hide its problem. It got it out into the open to make sure that its message was the one getting through.
Leveraging the Strengths of the President
One more weapon at the disposal of PeopleSoft was its new president. Craig Conway, CEO of PeopleSoft since 1999, provided a calm but fierce counter-personality to Oracle's brash and sometimes belligerent president, Larry Ellison.
It's hard to imagine that Ellison actually groomed Conway, who was the vice-president of sales and marketing at Oracle, before becoming president at PeopleSoft. Conway's insider knowledge of Ellison and Oracle was surely a strategic advantage in the PR war that started with the Oracle's unsolicited offer to shareholders. When Conway's first public comment about the offer was that it exemplified "atrociously bad behavior from a company with a history of atrociously bad behavior," the gloves were off.
PeopleSoft used Conway as its principal spokesperson in the battle of words that ensued in the summer of 2003. And he had no problems beating up his former employer. "Almost from the moment you start working at Oracle, you learn never to let the truth get in the way of a good marketing campaign," he said in an interview with Fortune magazine.
But the media exposure was not broad or reliable enough. To ensure that its customers received the message clearly and concisely, PeopleSoft sent a letter from Craig Conway to customers. In it, he outlined PeopleSoft's primary message clearly: "Incredibly, Oracle has made clear their intention was to discontinue all PeopleSoft products, ultimately forcing customers to convert to Oracle's applications and database. As you know, this would cost each organization millions to tens of millions of dollars."
But PeopleSoft did something else with that letter—something consistent with PeopleSoft's culture: It invited its customers to join in the fight:
In the end, PeopleSoft was the target of a hostile bid exactly because we have stronger products…. [Oracle] assumed a dramatic slowdown in customer purchases. Don't let it happen. Show your support for PeopleSoft by moving ahead with your planned purchase of PeopleSoft products this month…. Let us move forward together—this month, this year, and for years to come.
And just for good measure, PeopleSoft published that letter as a full-page advertisement in the Wall Street Journal.
Getting the Short Story to the Masses
Soon after the letter to customers from Conway, PeopleSoft began using advertising even more. Anticipating that its story would continue to gain national exposure, and assuming that it needed to sway the general public to their side, it ran an advertisement that outlined the risks of the merger to consumers, suggesting that the businesses, universities and governments that use PeopleSoft now would have to raise prices, tuition and taxes in order to cover the costs of conversion.
Consumers aren't PeopleSoft's customers, so PeopleSoft made a deliberate effort to influence the opinion of the general public in a case that has national exposure and has the potential to continue to escalate.
Although legal battles continue in this case, PeopleSoft retained its corporate reputation. It kept messages consistent through all media, made information about the case readily available and easy to find on the corporate Web site, and communicated openly with customers and other stakeholders.
Next week: Bringing in the allies (or, using different voices to tell the story).
Background
Challenges
- Staying on message throughout all communication in a crisis
- Disseminating accurate information
- Sustaining reputation and customer satisfaction through a drawn-out public dispute
- Responding to a brash and quotable foe in the media
- Getting information to an international customer base
Lessons
- Open communication during a public relations crisis can result in good PR.
- Capitalizing on the strengths of a leader can make him/her and the company appear stronger.
- Making your customers your partners in a crisis can help.
- Let others tell your story—more people might listen.
- If everyone in the company is saying the same thing, then everyone outside the company will start saying it too.
About PeopleSoft
PeopleSoft is the second-largest enterprise applications provider in the world, serving more than 12,000 customers in 150 countries. Its enterprise application software is used for customer relationship management, financial management, human capital management and supply chain management by government, education and business worldwide. Each product contains industry-specific features and functions.
Marketing Model
PeopleSoft markets and sells its products in most major world markets through direct selling, with a regional sales force. It has approximately 40 field offices in the United States and seven in Canada, and 60 offices in Europe, the Middle East, Africa, China, Japan, Asia-Pacific and Latin America. The sales cycle takes 3-12 months to complete.
Marketing efforts supporting sales include telemarketing, direct mail, public relations, advertising, seminars, trade shows and customer communication.
New customers of PeopleSoft products frequently rely on third parties to implement and manage the enterprise applications. These vendors include relational database management system (RDBMS) vendors, hardware vendors and technology consulting firms.
The Competition
Although PeopleSoft competes with various small application software vendors in specific product markets, it considers only Oracle and SAP its major competition in the large enterprise market segment, which is its primary revenue generator. It believes that Siebel Systems is its primary competitor in the customer relationship management segment. Both Siebel Systems and SAP are its respective industry leaders.
