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Microsoft Corp. on Wednesday again became a focus of the government’s suit to block Oracle Corp.’s hostile $7.7 billion bid for PeopleSoft Inc. With the trial nearing its halfway point, the Department of Justice used part of Wednesday to show that the Redmond, Wash.-based software giant is not a viable competitor in the large enterprise application market. Proving this would support the government’s contention that few enterprise software substitutes would remain for big companies should PeopleSoft be eliminated. Curtis Wolfe, the chief information officer for North Dakota, said his state recently chose PeopleSoft for financial management and human resources software, as well as for specialized applications to be used by the state college system. Among the six candidates considered was Great Plains Software Inc., a Fargo, N.D., vendor. The state eliminated the company’s bid prior to Microsoft’s April 2001 purchase of Great Plains for about $1 billion. North Dakota decided to re-evaluate Great Plains post-merger to see if the world’s largest software company had enhanced the programming with new features. Wolfe said North Dakota concluded again that Great Plains even post-merger was inadequate. “We felt it was warranted to take the time to be sure that they’re solution would or would not meet our needs,” Wolfe said. “Great Plains was a long ways from having a solution that could meet a state government’s needs.” Microsoft senior vice president Douglas Burgum, who is scheduled to testify for the government on June 23, came to the software giant via the Great Plains acquisition. SAP AG was another bidder for North Dakota’s software business, but its price was too high, Wolfe said. The German company submitted a proposal for a $60 million deal, while the others’ bids ranged between $35 million and $40 million. The government has sought to portray SAP as not a viable alternative for many potential software customers because of its price or the complexity of its applications. Oracle on Wednesday attempted to show the opposite. Because of a scheduling conflict, Oracle witness Christie Bass, a managing partner at business consulting and outsourcing firm Accenture, took the stand in a week generally devoted to government witnesses. Bass, who oversees the enterprise resource planning practice at Accenture, said that the largest percentage of her employees are experts in SAP software installations. Accenture’s SAP practice generates 4 times as much revenue as its PeopleSoft and Oracle practices combined. “SAP is strong for the Global 2000, stronger than PeopleSoft and Oracle,” Bass said. “Our SAP practice is a reflection of all their collective footprints in the markets and in those customers where we provide our services.” She also said that it is impossible to compare costs between SAP, Oracle and PeopleSoft as the products are different. Maintenance and support, which usually make up the bulk of costs in a software contract, cost nearly the same among the three software companies. Implementation costs vary between the companies depending upon what industry it operates in, Bass said. Microsoft, given its size, will begin competing in the high-end enterprise software market, Bass said. “It is just a matter of time,” she said. “Microsoft plays in the very low end, it dominates the desktop, it has Great Plains and other small software companies it has acquired. They certainly intend to become a provider of ERP-like application for very small businesses; to continue to grow, everything must converge.” She added that she expects Oracle, PeopleSoft and SAP to begin competing “down market” for mid-sized enterprises. “You will see competition from anyone in the technology stack,” Bass said. As he has several times in the trial, Judge Vaughn Walker expressed frustration with witnesses seeking to keep documents or sections of documents confidential. Walker said he would reverse his decision Tuesday to allow an executive from Greyhound Lines Inc. to redact figures that showed how much the cost ownership would be for two enterprise software packages the company was considering. “You may have sensed a growing disenchantment with the court with the claims of confidentiality and the redaction of exhibits,” Walker told the trial lawyers. “The more I get into this case, the more the devil is in the details. And I don’t believe the details have been shared with the court.” Walker said he would issue an order requiring Greyhound to show exactly why the figures in question should not be made part of the public record. Because the proceeding is running slightly behind schedule, expected testimony from a PeopleSoft executive was delayed until later Wednesday. Copyright �2004 TDD, LLC. All rights reserved.

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