In what is likely the year's biggest news in CRM, Oracle announced plans to buy long-time market leader Siebel Systems in a deal valued at $5.8 billion. This announcement comes only eight months after Oracle formally acquired another CRM rival, PeopleSoft, and positions Oracle to become the world's largest provider of CRM software. By acquiring Siebel, Oracle would inherit 4,000 CRM customers and 3.4 million user licenses.
But the announcement has triggered plenty of challenging questions. For example, what does this deal mean for the future of the CRM industry -- will there be any real choice left when it comes to evaluating enterprise CRM? And what about Siebel customers? How will this merger impact them? And how will Oracle effectively manage two significant acquisitions without yielding to chaos?
SearchCRM.com invited a panel of industry experts and analysts to share their views on the announcement and to predict what's in store for the CRM market once the dust settles.
Paul Greenberg, President, The 56 Group, LLC
I'm sorry to see this deal.
In the enterprise on-premise world, CRM competition is disappearing pretty quickly -- it is down to the two - SAP and Oracle. I can foresee some possible regulatory snags - predatory behavior often brings out the regulators, but I also remember the success that Oracle had in the PeopleSoft battle even with PeopleSoft and the government against it. So I'm not very hopeful that this deal will be stopped.
What makes this interesting is that Siebel's CRM products are considerably superior to Oracle's. How will Oracle handle them? Will they eliminate redundancies? If so, I'd recommend that they pretty much keep Siebel's applications and dump Oracle CRM applications which, while improved, just don't measure up to Siebel's.
Also, the bigger question to me is how they are going to handle Siebel CRM OnDemand, which is a VERY good product and an area that Oracle really has no experience with. They'd be smart to leave that alone and let the division currently running it at Siebel, (Bruce Cleveland and Ken Rudin among others) stay the course. I'm also intrigued by how salesforce.com and the other hosted vendors (regardless of platform aspirations) respond to this.
I'll be watching this one very closely.
Rebecca Wettemann, Vice president of research, Nucleus Research
It makes sense: Oracle gets more sophisticated CRM functionality and on-demand customers, and Siebel gets a strong position within an integrated suite of business applications. Customers get more integrated CRM and business application functionality as well as vertical expertise and functionality that should drive more rapid deployments and accelerated ROI.
|J. Bruce Daley|
J. Bruce Daley, Founder and editor, The Enterprise Software Observer
Since most of the founders and employees of Siebel Systems learned the software business at Oracle, there has always been a fratricidal aspect to their competition. But the industry had been moving away from Siebel anyway so the impact is not as great as if Oracle had acquired, say, Salesforce.com. It's a very smart move for Oracle and Wall Street seems to agree.
In my opinion, it doesn't mean much for existing Siebel customers. Some Oracle competitors, like Microsoft, will have to make a transition, but there are many good, independent systems integrators available to help support customers who want to continue using Siebel and help transition those who do not want to continue with the product.
Siebel Systems has been fighting a two front battle against SAP and Salesforce.com and increasingly losing both. What should be in focus today is that Oracle has been trying for years to put Siebel Systems out of business and they finally succeeded.
Denis Pombriant, Managing principal, Beagle Research Group
Although ownership has changed, that is largely a financial matter and the financial economy is not the 'real' economy where products and services are bought and sold so that companies can do useful work. That said, I think it opens up a lot of opportunity -- it puts more substance behind CRM and Siebel. Oracle has been a #3 or #4 player in CRM and I don't think acquiring PeopleSoft was the knockout punch that Oracle needed to become dominant in the space. But the Siebel deal would give it the critical mass it needs to compete with SAP on the high end and others like Salesforce.com on the low end.
On the other hand, Oracle now has a grouping of some very good products that don't automatically work well together. It's sort of like having a Porsche engine disassembled on your garage floor. Putting it all together is going to be critical. Meanwhile, none of the competition is standing still.
The biggest question I have is what about IBM? Siebel is a partner with IBM in the on demand space. IBM sells Siebel OnDemand and hosts it. How will this event affect that relationship?
I think this leaves plenty of choice in enterprise CRM -- Siebel continues to be strong, SAP has new strength and companies like Salesforce.com have moved up in the pecking order. Salesforce.com has been making great strides in the enterprise and it wouldn't surprise me if the Oracle/Siebel event lends more clarity to the enterprise decision -- and 'to host or not to host' becomes the biggest question. If that logic prevails, might it mean that CRM becomes more likely to be the application that enterprises host?
Paul Sweeney, president of the Sweeney Group Inc.
Although Oracle's acquisition of Siebel is huge, I'm not surprised. As I have said before, the CRM industry has matured and CRM is no longer the "silver bullet" that it once was. I think everyone now "gets it" -- CRM is a discipline...not just a cool technology. It's become harder and harder to differentiate one product from another. To a large extent, every product now shares the same DNA. With this announcement, it is clear that the CRM gold rush is over.