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  Larry and Joseph
 
Clearly, Oracle's bid for Peoplesoft raises some major questions. Should the deal be allowed to go through? What are the anti-trust issues? What will happen to Peoplesoft and JD Edwards customers? What will happen to their employees? Gallons of ink have been spilled on these subjects, with much more to come.
 
These are good questions, and no doubt important ones (especially to Peoplesoft and JD Edwards employees and customers). But they miss the big picture.
 
Some of you may be familiar with an economist named Joseph Schumpeter, who wrote a number of books in the early 20th century, most famously the Theory of Economic Development. For those of you who are not familiar with Schumpeter, no need to hit the library - because you're seeing his theories in action right now.
 
In particular, Schumpeter is the father of a theory called 'Creative Destruction'. In essence, what this theory says is that growth doesn't happen until obsolete institutions are removed - and often destroyed. In other words, we can't build new roads unless we bulldoze a few houses. And we can't build new business models and companies, until the old ones are cleared out of the way.
 
Well, these days Oracle is clearly playing the role of bulldozer in the Enterprise Software business. But the point is not destruction - what we need to understand is that the bulldozer is desperately needed.
 
The entire Enterprise Software industry is still far, far too crowded. There are, quite simply, too many me-too CRM, ERP, SCM, etc... vendors. With too little benefit delivered to date, and too few customers looking for their solutions.
 
Enterprise Software was a sparkling city of the future in the mid-to-late 90's. But these days, it has become a run-down, overcrowded shantytown. And now the shantytown is under siege. It's not just Oracle. Salesforce.com, RightNow Technologies and the hosted CRM providers are in the basements of its skyscrapers, sandblasting the foundations. And Larry Ellison no doubt sees the even bigger bulldozer, driven by Gates and Ballmer, in his rearview mirror.
 
Peoplesoft and JD Edwards customers don't want to lose their investments. Peoplesoft and JD Edwards employees don't want to lose their jobs. And if you're a politician trying to seem like a 'consumer good guy' - saving jobs, preserving the state's (see Connecticut) investment - it's a no-brainer to start taking potshots at big, bad Larry.
 
But remember - these deals are not so much a growth strategy for Oracle as a survival strategy. As the market shakes out - regardless of who does the buying and selling - only the strongest will survive. In other words, Larry Ellison ultimately has no choice, and neither do we. As with democracy, progress isn't always pretty, until we consider the alternatives.
 
Chris Selland founded Reservoir Partners, an innovative, end-user focused research, advisory and consulting firm that creates powerful, practical Relationship Management strategies, in October 2001. He has a successful track record in helping companies define, prioritize and execute highly-successful customer-facing Relationship Management strategies.