SAN FRANCISCO, Nov 6 (Reuters) - PeopleSoft founder Dave Duffield, who lost the software maker in a hostile takeover by Oracle Corp ORCL.O, returned to the industry on Monday with a new company looking to challenge his larger rival.
Workday Inc., funded mainly by Duffield, will offer Web-based software that helps companies automate their human resources systems in a bid to take advantage of growing demand for applications delivered over the Internet.
The company will compete in the so-called human capital management software market led by Oracle and SAP AG (SAPG.DE) of Germany that AMR Research estimates at about $6 billion.
Duffield said Workday is partly a reincarnation of PeopleSoft and he noted his decision to return to the industry began during his battle with Oracle when he came out of retirement to try to save his former company.
“We worked hard to keep PeopleSoft out of the clutches of Oracle,” he told a news conference. “While Oracle prevailed it offered someone a chance to take a fresh approach to solving business problems.”
Paul Hamerman, an analyst at Forrester Research, said Workday will eventually target those large Oracle and SAP customers frustrated with owning software that is often expensive to buy and difficult to maintain.
He also said Duffield brings immediate credibility, a team of industry veterans and a product based on a hot technology to his new company.
“He has tremendous credibility in the industry and a team of veterans with him,” Hamerman said. “Ultimately, he is targeting the large on-premise ERP software vendors.”
Initially, the company will target businesses employing 1,000 to 5,000 workers with revenue ranging from $200 million to $1 billion, said Workday co-founder and former PeopleSoft board member Aneel Bhusri.
But Workday will look to expand its offerings beyond those targeting human resources to take on Oracle and SAP in the wider market for business software aimed at large corporations, he added.
“Our goal is to be a supplier to Fortune 500 companies just like we were at PeopleSoft,” Bhusri said in a telephone interview. “In the long run, two to three years, we will compete against Oracle and SAP.
Workday marks Duffield’s return to a consolidating software industry where Oracle has spent $20 billion over the last two year buying its rivals, including PeopleSoft.
Oracle launched a bitter takeover battle for PeopleSoft in June 2003. Eventually Duffield resigned in December 2004 after PeopleSoft’s board accepted Oracle’s $10.3 billion offer.
Duffield’s new company is looking to fast-growing companies like Salesforce.com (CRM.N) and RightNow Technologies RNOW.O as examples of demand for Web-based software that for many businesses is often easier to use and maintain that traditional installed software.
Web-delivered software will grow to 25 percent of business software revenue in 2011 from 5 percent in 2005, according to technology research firm Gartner.
“Salesforce is the poster child for how successful on-demand can be,” Bhusri said. “They have really whet the appetite for people who want on-demand for (business planning software).”