NEW YORK: Sales people at e-business software firm PeopleSoft Inc., are
working harder to close deals and customers are being more aggressive about
demanding discounts in the slowing US economy, the company's chief executive
said.
CEO Craig Conway said PeopleSoft's strong sales pipeline - the amount of
prospects that the company had turned into actual sales - has helped it buck the
trend in software by reporting earnings last month that beat Wall Street
expectations. "If you look back at PeopleSoft over the last five years,
we've converted one-half of the pipeline, plus or minus 3 per cent, every single
quarter," he told Reuters in an interview on Thursday.
But Conway said the flagging US economy and slower information technology
spending have widened that ratio for his company, whose software helps companies
run their business and automate their relationships with customers and
suppliers. "We may need 2.7 in the pipeline to get 1 deal," he said.
"We don't know ... we're not quite as confident."
While Conway said PeopleSoft was not seeing companies put off their spending
decisions - a common problem cited for earnings shortfalls at rival vendors such
as Oracle Corp. - he said customers were getting much more aggressive about
demanding discounts. "We're under tremendous pressure to discount ... but
they need this stuff so we eventually get the deal," Conway said.
In addition, Conway said customers were demanding certain concessions such as
free consulting for 60 days in return for agreeing to buy PeopleSoft's software.
PeopleSoft has stuck out in the software sector as being one of a very small
handful of firms to meet or exceed analyst expectations amid growing pressure
from the US economy.
The majority of software firms, including big names like Oracle, i2
Technologies Inc., BroadVision Inc., Ariba Inc. and E.piphany Inc., have been
forced to post earnings lower than analyst estimates and reduce their outlook
going forward.
Since the start of the year, when the slowdown of the US economy began to
surface, shares of PeopleSoft have outperformed rival Siebel Systems Inc. by 32
per cent. It has performed in line with the Standard & Poor's Computer
Software index after a spell of under-performing the index.
Conway said the main reason PeopleSoft had not been hit by the slowdown, was
because its software applications are designed from ground up to be accessible
over the Internet. "We bet the whole company on the Internet," he
said, adding that other vendors, namely Oracle and German software giant SAP AG
had said their applications are Internet based, but still require users to run
software locally, on their computers, as opposed to accessing the applications
over a browser. "I would say that 70 percent of our success in these last 6
quarters has been the technology," Conway said.
(C) Reuters Limited 2001.