In September, just as the takeover battle between PeopleSoft Inc. and Oracle Corp. was heating up (again), PeopleSoft announced its largest ever strategic alliance: a $1 billion, five-year technology deal with IBM Corp. At the time, the alliance appeared to some as an attempt to thwart Oracle’s long-running hostile takeover of PeopleSoft. But while some may have hoped that IBM could be PeopleSoft’s white knight, the alliance brought to PeopleSoft something just as valuable: the IBM middleware technology known as WebSphere.

A family of revolutionary software, middleware acts as a working link to enable different, otherwise incompatible computer programs to run seamlessly together. At a time when companies are struggling to automate and allow real-time data exchanges among internal departments, suppliers and customers, this is business technology’s Holy Grail. The market, only five years old, is already at $6 billion and growing, and for a vendor trying to sell pricey ERP systems that in the past have struggled to integrate with other legacy systems, not being able to offer such a package could spell disaster as fast as any takeover.

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