By Kyle Munzenrieder
By Kyle Munzenrieder
By Terrence McCoy
By Jeff Weinberger
By Ryan Yousefi
By Chuck Strouse
By Terrence McCoy
By Terrence McCoy
Neely was right about that. The review committee preferred PeopleSoft. From a technical standpoint, the members thought the company offered a better, more versatile product. PeopleSoft's software interacts with other computer programs more easily than Oracle's, and its overall package offered better training and customer service.
Next the committee solicited prices from the two companies. "This was difficult," Randy Witt admits. "It was hard getting an apples-to-apples comparison of the two products." Oracle, for instance, wanted to charge the county $2.8 million for the right to use its software system on 4000 computers. PeopleSoft was offering unlimited usage for $3.1 million. "We had to adjust all kinds of numbers," Witt says.
The committee faced another complicated issue. The county wanted any new accounting software to include a database application as well. Oracle's software system came with a database, but PeopleSoft's did not. PeopleSoft told the committee that several database programs, offered by a variety of companies, were compatible with its software. Eventually one could be selected to meet the county's needs. The cost for those databases varied widely, so PeopleSoft told the committee it didn't know what dollar figure to include in its pricing. Without consulting PeopleSoft, the committee decided to add to the company's proposal the cost of the most expensive database system on the market.
In comparing costs between PeopleSoft and Oracle, the county studied two sets of prices. The first limited the software system to just the aviation and the water and sewer departments. Under that arrangement the Oracle price was $5.5 million versus $6.3 million for PeopleSoft -- a difference of $800,000.
The second price comparison was based on the cost for the two departments plus the anticipated cost of extending the software system to all county departments. Under this scenario Oracle offered a price of $9.8 million. The committee estimated the PeopleSoft price to be $10.1 million -- a difference of $300,000.
In both comparisons the pricing was a "worst-case scenario" for PeopleSoft because the committee had tagged on the highest possible price for a database. Nevertheless in May the committee recommended PeopleSoft by a 9-1 vote.
During these deliberations PeopleSoft had no idea what was going on in Miami. After making their presentations and submitting their cost estimates, the company's representatives -- Michael Youngwirth and Esteban Neely -- returned home. They weren't informed that the committee had voted to recommend them, and they didn't know their figures had been altered to include a worst-case cost for a database program.
Witt presented the committee's findings to Steve Shiver, who had taken over as county manager on February 14. By June Shiver had made his decision. He was going with Oracle, citing price as the main factor. "I was mystified," says Neely. "I could not believe that after all we went through, and listening to the committee [during our presentation], that they would have selected Oracle."
Despite being bewildered, PeopleSoft had no intention of challenging the manager's decision. Instead Youngwirth and Neely asked for a chance to meet with the review committee in order to learn what things the group liked about their presentation and system and what things might be improved. Witt agreed, and the two men returned to Miami in early July.
Neely says the meeting was very strange. Although most of the committee members were there, Witt did all the talking. "You represented yourself well, and we like your product," Witt said, according to Neely. "But this just came down to price."
Youngwirth and Neely didn't argue. They thanked the committee members for their time and, as they prepared to leave, asked for any documents relating to the selection. Witt said they needed to submit a public-records request. Youngwirth wrote it out by hand, gave it to Witt, and then he and Neely left town. "As far as we were concerned, that was it," Neely recounts.
On July 17 Youngwirth received a fax at his Tulsa office. In response to the public-records request, Witt sent him an eleven-page document that included the committee's report on the review process. On the last page it stated, "CIO Financial Systems Working Group recommends PeopleSoft on functional and technical merit."
More confused than ever, Youngwirth and Neely began looking closely at the numbers. Their price had been miscalculated. The cost of the database, added by the committee without their knowledge, had increased their figure by nearly $1.3 million in each scenario. Had the committee added the cost of a less expensive database, PeopleSoft's overall price easily would have beaten Oracle's. "I was dumbstruck," Neely says. "How could the manager have just passed us over?"
Now they began to wonder if they had lost because of the one thing they didn't have -- a lobbyist. "I don't have anything against lobbyists," says Neely. "But as a company we have sales professionals. We know what we are doing. We were invited to compete, we presented our product, and we thought that would be good enough. But like I said before, I guess I'm naive."
Youngwirth and Neely learned the Oracle deal was going to be heard by the county commission on July 24. They had a decision to make: They could either accept the manager's recommendation or fight it. Neither hesitated. They were returning to Miami.