JSE-listed ERP.com has bought the PeopleSoft SA business, effectively becoming the sole local distributor for PeopleSoft products. The deal, signed last week, is to see a new ERP.com subsidiary created to house the PeopleSoft business.
The agreement ends a little less than a month of speculation, after it became public that then-PeopleSoft MD Jan Coetzee planned to resign and that the local operation would be sold.
ERP.com CEO Peter Forsyth would not disclose the value of the cash deal, but said the price did not warrant the issue of a cautionary notice.
The wholly owned ERP.com subsidiary, which is yet to be named, will come into being on 1 July, and will be headed by Paul Mather.
Mather takes credit for recommending to what was then Q-data that PeopleSoft products be distributed in SA, making Q-data the first overseas distributor of its software in 1993.
PeopleSoft established a local office in 1996, after "the management team at Q-data left the company," according to Mather.
Direct doesn`t cut it
But after four years, PeopleSoft admitted that its SA office was not making the grade.
"The appointment of local company ERP.com to drive the sales and marketing operation is a recognition that a single global model does not necessarily suit all markets," PeopleSoft GM for Northern Europe Dale Thomas was quoted as saying in a statement from ERP.com.
Forsyth skirted the issue of the success of the direct office, but says that PeopleSoft "would have liked to have had more success" in SA. "It probably didn`t perform as it should have, but I am confident that it will do so now," he says.
The new company will have PeopleSoft as its sole line of business and ERP.com as sole shareholder, but PeopleSoft will maintain representation on its board. Mather expects it to employ around 10 people, roughly the same number employed in the previous office. Most former employees are expected to join the new company.
Royalties will be paid to PeopleSoft international in line with usual distributor agreements.
The exact business plan of the new company is to be fleshed out in the coming month, and Forsyth would not be drawn on the contribution it will make to ERP.com revenue, but said the impact will not be immediate.
"We believe that over the next 18 months the PeopleSoft potential will materialise in the form of a solid contribution to ERP.com," he said. "We are committed and will put in whatever investment is needed."
Forsyth says Coetzee, former MD of the local office, did not leave PeopleSoft under protest of the transaction. "Coetzee was involved in the transaction process and parted on amicable terms." He says Coetzee may be approached to join ERP.com in a different role.
ERP.com says the local client base, comprising around 20 large installations, had been informed of the change and had reacted positively to the news.
More of the same?
ERP.com has characterised the deal as the creation of a new model, which fills the middle ground between a direct vendor presence and an arms-length distributorship. According to Forsyth, disinvestments would not be a correct description.
"This is a very different model. The negotiations were not about how much they are to be paid."
Mather and Forsyth say the new model provides a great deal of flexibility to local operations while not cutting off the flow of international support.
"I don`t know of anything similar being done, but I wouldn`t be surprised if other software vendors follow the trend," says Forsyth. The same may also hold true for other PeopleSoft offices around the world. "SA could be a forerunner for what we will see elsewhere."
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