for reference, here is excerpt from recent Lehman report on PSFT e-business opportunity. Link: lehman.com
HOW BIG IS THE POTENTIAL OPPORTUNITY? We pulled together some numbers from a
wealth of sources* to come up with some preliminary sizing on the PeopleSoft
Business Network (PSBN) opportunity. It is probably not unreasonable to
consider this a $1 billion/year opportunity in the U.S. alone over the next
five years. While the obstacles to carrying it all out remain significant,
and other enterprise resource planning (ERP) vendors can enter at this early
stage with few barriers, the implications should at least be considered.
In the U.S., there are approximately 127,800,000 people in the workforce,
with approximately 64.2% estimated to be receiving benefits -- 82,047,600.
The average cost/employee/hour for benefits in both the private and public
sector is $5.47 ($1.30 paid leave, $0.51 supplemental pay, $1.25 insurance,
$0.75 retirement/savings, $1.63 legally required benefits, $0.03 other). The
benefits cost in the U.S. is $933.5 billion, with an average cost per
employee of $11,377.60, assuming 2080 hours of hourly work per employee. For
modeling purposes we have assumed that the efficiency factor (EF) is 10%,
meaning that one could lower the cost of administration by 10% using a very
intelligent network. We have assumed that the capture proportion (CAPTURE)
is 20%, meaning that the network provider would be awarded 20% of the new efficiency, and the remaining 80% would be absorbed by the employer. We have
also assumed that the cost of administering these benefits is roughly 20% of
the overall costs. If PeopleSoft were to capture 10% of the U.S. opportunity
using the formula described in our prior note, it would mean $373 million
annually in revenues. If it were to capture 30% of the market opportunity in
the U.S. (it controls more than 50% of the client/server market for human
resource management), then it would translate to $1.1 billion per year.
We are not implying that these types of figures will show up next year, but
clearly the long-term potential for this is huge for PeopleSoft and others
such as ADP (AUD - $41 1/8; Buy) or SAP (SAP - $33 9/16; Neutral). |
