Oracle Buys Siebel

By RICH TEHRANI

TMCnet Editor-in-Chief

Months back I mentioned in my High Priority column in Customer Interaction Solutions magazine that there are web rumors of Oracle buying Siebel. Siebel is the perfect company for Oracle to acquire as it allows Ellison’s company to get large amounts of new maintenance revenue to help fuel the company’s need to constantly grow.

Today MarketWatch reported that indeed Oracle will purchase Siebel for $3.6 billion dollars.

This is not a good deal for the customer in my opinion as Siebel is the CRM leader and as such is focused exclusively on the customer relationship management market. A purchase by Oracle will no doubt dilute focus and attention from CRM, making it just another product line instead of a core strategy.

We can expect reduced innovation as there will be more of a focus on a cohesive software strategy as opposed to making and selling the world’s best CRM software.

Others will argue that in a world where integration becomes more and more important, Oracle will be able to leverage Siebel and have it talk seamlessly with other applications in the company’s portfolio. Yes, that is true but it removes the best of breed argument IT managers make when deciding what products to purchase. How can you have best of breed products from the same company? It just doesn’t work like that.

Will the EU or DOJ allow the deal to go through? I think there is a chance the deal won’t be consummated. Siebel has a near-monopoly position on the CRM space and even when you consider Salesforce.com and a handful of other players, they don’t have the market share or share of mind that Siebel has garnered over the last decade. Even Microsoft hasn’t done a great job selling CRM software. You could argue that Microsoft’s problems are its own or due to market pressures from competitors. Either way, it shows that it isn’t easy to set up shop as a competitive CRM software company -- even if you have an unlimited budget and infinite distribution channels.

If regulators are truly concerned about having a competitive CRM space, they will not allow the deal to go through. As an IT buyer you too should be concerned about the rapid lack of choice in the CRM software space. If there is one thing we have learned in technology over the years it is that competition equals innovation.

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Rich Tehrani is President and Group Editor-in-Chief at TMC and believes in competitive markets but at the same time thinks companies are entitled to execute exit strategies as long as the customer doesn’t lose out on the deal.