Solving the Integration Problem
They also expressed no resentment that the Oracle announcement happened to coincide with the opening Monday of Salesforce.coms Dreamforce user conference here. Its hard to imagine that Oracle and Siebel would time the signing of a definitive merger agreement just to intrude on the user conference, said Jim Steele, Salesforce.com president.Oracle is aggressively acquiring software companies so it can acquire a larger customer base that it can sell applications to, Pombriant said. The problem with this strategy is that it doesnt necessarily produce new and innovative software, just a continuing stream of revenue. "I would prefer to see a burst of innovation that results in new products to sell to customers rather than the creation of a homogenized product line" that resulted from an acquisition campaign, he said. It will be difficult to successfully consolidate all the software technology that Oracle has acquired over the past year, Pombriant said. "Im skeptical about what the results will be," he said. Oracle may not be able to integrate all those acquired products fast enough before customers start to give serious consideration to moving to the on-demand products offered by smaller and more nimble companies, such as Salesforce.com and RightNow Technologies Inc., noted Janet White, an analyst with Info-Tech Research Group based in London, Ontario. "By purchasing Siebel, Oracle has acquired an additional 3.4 million CRM users and the maintenance fees that go with that kind of installed base," said White in a prepared statement. "But how much time will Oracle really have to integrate its existing portfolio to create innovative new products, when it has to spend most of its time maintaining disparate, monolithic systems" acquired through its recent buyouts, she said. Check out eWEEK.coms for the latest news, reviews and analysis about customer relationship management solutions.
The buyout is just more evidence of the persistent consolidation that is going on in the application software market, noted Denis Pombriant, principal of Beagle Research Group, a CRM industry research specialist in Stoughton, Mass.