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Rich Tehrani

Oracle Buys Siebel: What It Means To The Customer

By: Rich Tehrani, Group Editor-in-Chief,
Technology Marketing Corporation


I was initially against the merger of the two software behemoths Oracle and Siebel, and as soon as I heard about the transaction, I noted how it would be disadvantageous for customers. I even briefly wrote about the circulating acquisition rumor in the May 2005 issue of this magazine (tmcnet.com/185.1). Since then, I have had time for reflection on the matter, and I have read a significant amount of insightful comments from analysts and a number of other experts. It would seem almost everyone but me thinks the transaction is consumer-friendly; as in, positive for customers. One particular article I recently read offered opinions from a selection of current Siebel and Oracle customers, all of whom are happily satisfied that the job of integrating the two companies' software is now in Oracle's hands rather than the customers'.

In fact, forcing Oracle to handle the integration seems the primary reason for why this acquisition is good. It may be the only reason ' at least the only good one for consumers. Market research firms will tell us that SAP is the market share leader in CRM, though it isn't the mindshare leader; that title belongs to Siebel. Now that Siebel assets are controlled by Oracle, the latter has a better chance to compete against SAP. However, who is looking out for the CRM market?

Siebel was the flagship company in the space and, without this company, we are left with Salesforce.com. Although this company is a great organization to carry the CRM torch, it isn't as large as Siebel and it doesn't sell software...it sells service.

Siebel, on the other hand, has made its living selling software ' it was the 'Microsoft of CRM.' It carried the torch...it was the bellwether. And now it's gone. Sure, it will be part of Oracle along with dozens of other companies, initiatives, markets and profit centers...yet how much attention does CRM get in such an environment?

Certainly not enough, I think.

It would be one thing if Siebel was to remain a wholly owned subsidiary, but this rarely happens. Therein lays the wrinkle in my argument.

If Oracle is busy integrating Siebel into its portfolio of products, which is a massive undertaking by any means, does this leave room for more competition rather than less? Was I too hasty? After all, Oracle has a bewildering array of products to support, and on top of that, it sells its own CRM software and is busy integrating PeopleSoft and JD Edwards applications into its portfolio of products.

One can only imagine how complex this undertaking will in fact be, as Siebel itself is undertaking a massive operation in integrating its hosted and software offerings into a single code base, which means also having to deal with a slew of vertical applications such as insurance and healthcare.

I have always thought that the best solution to CRM integration with other applications was to set up open-standards software, upon which all vendors would agree, to allow transactions to be shared among different packages such as billing and shipping. This never really happened; it is perhaps too utopian an idea to ever be done effectively.

This concept, however, is what Salesforce.com recently introduced. Its AppExchange is an on-demand application marketplace that allows customers to quickly purchase pre-integrated applications such as human resources or other specialized functions.

So, while Oracle and SAP want to be your single software vendor, Salesforce.com will allow best-of-breed solutions to be built from an assortment of applications available on an online marketplace.

The Saleforce.com model is closest to my imagined ideal world.

The question, then, is this: Will this model be able to scale to meet the needs of the largest organizations in the world? We are talking about integration that defies understanding, and companies have spent an aggregate of tens of billions of dollars in the past decade alone to integrate disparate applications. It is difficult to believe this whole complex problem can be encapsulated and solved so easily.

I digress, noting again the Oracle and Siebel transaction. Salesforce.com's Marc Benioff has already inferred that customers will be left out in the cold by this deal. He further went on to say that none of these really large software deals ever work.

Amazingly, the Department of Justice (DOJ) gave Oracle a tough time before the JD Edwards acquisition was allowed to go through. Will it be Benioff's words that allow this deal to happen? And, even more, is this what Benioff really wants?

I conclude that this transaction is potentially positive for current customers of both Oracle and Siebel, at least for the short term. For new customers, however, it is bad news. There will be less competition and, further, there is a void ' a huge gaping hole, in fact, where Siebel once stood. Who will fill this void, if anyone? It is a problematic prediction, but filling that hole will require someone with some massive shoes, as it were. Will it be version 3.0 of Microsoft CRM that allows the Redmond giant to rise to the challenge? After all, the third version of every Microsoft product seems to be the version that people most like. Will this be true in customer relationship management, as well?

The next six months will be quite an adventure in the CRM market, and we are poised to see much excitement. I hope that in the end the CRM market as a whole benefits from all of this inevitable action-filled excitement, hoping, too, that we have a more vibrant environment with more choices and more competition than ever seen before. Part of me knows I will likely be disappointed. That same part of me also realizes that a first reaction to something is typically the correct reaction. CIS

Sincerely yours,

Rich Tehrani
Group Publisher, Group Editor-in-Chief
[email protected]

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