So we started the company to be unequivocally the replacement platform for HR and ERP systems that had been delivered in an on-premise way. We were under development for about 15 months and brought the initial core HR product to the market in November of 2006. In July of 2007, we introduced our financials product. We've also got our payroll product coming out in May 2008. We're up to about 170 people now—about 80 percent are from PeopleSoft.

CIO: Both of you were very much a part of PeopleSoft, which was and still is in that "on-premise legacy vendor" world you now rail against. Can you explain to CIOs the change of heart?

Bhusri: When Dave and I went back to PeopleSoft in 2004, you could just see that with the current on-premise architecture—even though it had added a Web front end but there was still a client/server architecture—you could just see where it had failed. The big issue was, as customers had customized their systems (which had made it increasingly difficult to upgrade), the cost of upgrades was prohibitive and the value of maintenance as a result was getting to be less and less, they would hit the wall of the architecture. You hear about SAP upgrades of $50 million to $100 million. Well, it wasn't that high at PeopleSoft toward the end, but it wasn't that much better.

If PeopleSoft had survived and Dave and I were still running the company, then we would have launched the on-demand initiative in 2005. That's what we were gearing up to do anyway. That was the set of slides I presented to the PeopleSoft board: that the next version of PeopleSoft needed to be an on-demand version because that's where the market was headed.

Probably my best answer to you is just look at what SAP is doing with its Business ByDesign [on-demand applications]. Now there's a company that doesn't have to go into a new market unless they really believe it's going to be disruptive. And they too have jumped on the on-demand wagon.

Dave Duffield: There's another aspect to this too.

Dave Duffield

We're very proud of what we achieved at PeopleSoft in developing that high-touch relationship with the customer. From what we understand today, that's been lost by the SAPs and Oracles. The customers don't feel like business partners anymore.

Bhusri: What we have seen that surprised me, and I would consider Dave and meformer legacy ERP guys, is the surprising lack of pushback from our customers and, in general, from CIOs with on-demand, at least as it relates to HR and payroll. We're going to learn more about accounting in the next 12 to 18 months.