Heavy Dose of CRM

By John Pallatto  |  Posted 2005-04-29 Print this article Print

Tom Siebel is a former Oracle executive. And while its always tough for a corporate founder to sell off the company that bears his name, Siebel may have decided that the best way to maximize shareholder value was to swallow his pride, check his ego at the door and seek a deal with his former employer before the companys prospects eroded further. Click here to read about recent speculation that Oracle might be setting its sights on a buyout of SAP. But on the other side of the coin, there is the question of why Oracle would want to acquire even more CRM technology. Between the CRM products Oracle acquired in the PeopleSoft buyout and its homegrown CRM products, Siebels products are looking rather redundant. Oracle would likely do a lot of rendering and winnowing to trim down the Siebel product line to its most valuable essentials.
Its possible that Oracle would most prize the Siebel OnDemand hosted CRM service. But even then, Oracle would face the significant tasks of integrating and marketing CRM technology from three different companies. How many CRM products does one company need to sell?
Then there is the question of whether Oracle is in a good financial position to spend billions more on another major acquisition. That might not be so big a problem when you consider that Oracle could use the $2.2 billion in cash Siebel has in the bank to defray the acquisition costs. Oracle would just be following the first law of corporate acquisitions: Use the other guys money. Oracle CEO Larry Ellison has been saying for the past three years that the Silicon Valley software community is ripe for consolidation and that Oracle would help the process along with its own acquisitions. Since December, Oracle has closed a buyout deal with PeopleSoft for more than $10 billion and has outbid enterprise application arch rival SAP to buy retail software producer Retek for $630 million. In March, Oracle acquired Oblix, a privately held identity management company, on terms that werent disclosed. There has even been recent speculation that Oracle is lining up SAP as its next buyout target, a notion that stretches credulity to the breaking point. Oracle officials acknowledge that they usually make several small corporate acquisitions each quarter. But it might start to put a strain on even Oracles bank account and credit for it to make another multibillion corporate acquisition so soon after absorbing PeopleSoft. Meanwhile, Siebels customers must be wondering already how well their CRM applications will run under Oracles fusion middleware plan, which is being developed to meld the PeopleSoft and J.D. Edwards ERP applications it has already acquired. Its unlikely that customers will joyfully welcome an Oracle buyout with shouts of "the more the merrier." Lisa Vaas, eWEEK.com news editor/operations, contributed to the preparation of this commentary. John Pallatto is a veteran journalist in the field of enterprise software and Internet technology. Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.

John Pallatto John Pallatto is eWEEK.com's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.

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