The recent completion of the $10.3 billion takeover (£5.5 billion) of PeopleSoft by rival software company Oracle not only brings to an end one of the most bitterly contested corporate bids of recent times, but also threatens to fundamentally change the market for HR software in the UK and the rest of the world.

By acquiring PeopleSoft, which had earlier bought JD Edwards, California's Oracle effectively becomes the only significant rival to Germany-based SAP. While this might be regarded as reducing choice for the large international companies - the chief buyers of enterprise resource planning (ERP) and related systems - observers are convinced that the deal also creates opportunities for other suppliers, which in turn will increase options for HR directors.

For a start, just dealing with the integration of the two companies threatens to distract Oracle's management - which has already spent 18 months pursuing its target - from serving the market. In such situations, "it is very difficult to keep your eye on the ball - there are always lots of issues", says industry analyst Dennis Howlett.

Perhaps the most important of these is the level of support Oracle will continue to give to PeopleSoft and JD Edwards products. In an announcement to customers and partners on 18 January, Larry Ellison, chief executive of Oracle, committed his company to supporting PeopleSoft product lines until 2013, drawing on the support of well-known customers and partners such as Mastercard and Hewlett-Packard.

Ellison also announced "Project Fusion", an application platform being developed to "combine the best features and functions of Oracle's applications with those of PeopleSoft and JD Edwards".

Vance Kearney, vice-president of HR for Europe, Middle East and Africa at Oracle, admits that technological complexities mean it will be some time before such a product is available. But he reiterates Ellison's assurances that Oracle will support PeopleSoft products, and says the aim of the merger was to gain market share.

"We didn't pay $10 billion for the company to lose customers," he adds. In fact, he claims, reactions from customers have so far been positive, and he points out that companies do not suddenly abandon IT systems just because the ownership has changed.

Even so, industry commentators are sceptical, regarding the statements by Ellison and other executives as little more than "window dressing", designed to reassure PeopleSoft customers. Supporting a range of products will undermine the financial basis of the takeover and will be likely to give way to a slimmer portfolio in an effort to meet investors' expectations, they say. Moreover, the expected loss of 5,000 jobs in the combined entity will fuel fears about a decline in support for PeopleSoft products.

One company that will be watching developments with a special interest is BT, which last year signed a contract with PeopleSoft for the implementation of a global, business-wide HR system.

Margaret Savage, BT's director of HR strategy and systems, says: "It is essential that the promises made by Oracle are now maintained: that they will support not only this version of the software but also enhance the application going forward. Over the next few months we will be sitting down with representatives from the 'new' company to ensure that all these promises and deliverables are met."

Any fallout from the newly enlarged Oracle, employing nearly 50,000 staff, is not likely to be swift. According to Mike Theaker, European partner at Mercer HR Consulting, it will take three to six months to see any effect. He says that, because of the sheer expense involved, "there won't be a mad rush to replace systems", but many HR and IT directors will be concerned and will watch developments.

Much smaller players look set to benefit too, not least because - as with other big mergers - the new entity is likely to concentrate on serving only the largest businesses in the world.

Mercer's Theaker says there is already a trend towards using "niche solutions rather than getting everything from the same place", and this is likely to be reinforced by the Oracle/PeopleSoft deal.

..Michael Richards, chief executive of fellow UK HR and payroll software provider Snowdrop Systems, agrees that there are likely to be opportunities - though he says it is too early to know exactly what shape they will take..