Oracles Latest Coup: Siebel

 
 
By Renee Boucher Ferguson  |  Posted 2005-09-19
 
 
 

The questions raised about Oracle Corp.s $5.85 billion acquisition of CRM giant Siebel Systems Inc. last week wont have any answers soon, say users and analysts.

Oracle has ongoing acquisition integration work to maintain—its acquired nine companies in as many months—and its in the throes of Project Fusion, a combination of its own software and acquired applications into a single suite.

"This does come to the heart of [Oracles] challenges," said Debra Domeyer, chief technology officer of Carsdirect.com, in Culver City, Calif. "How do they take all these different pieces theyve gotten and ... at some point, they have to throw some of this out. I dont think its going to be Siebel, so Im OK, but theres going to be some bloodshed somewhere."

The customer relationship management applications present an interesting integration challenge. Once it acquires Siebel, Oracle will own the Oracle E-Business Suite, Oracle On Demand, PeopleSoft Enterprise, JD Edwards EnterpriseOne, Siebel and Siebel OnDemand CRM products.

"The Fusion picture is clouded by the Siebel acquisition," said Paul Hamerman, an analyst at Forrester Research Inc., in Cambridge, Mass. "Oracle doesnt have the time to rewrite applications from scratch. They have to figure out how to migrate functionality without rewriting."

Oracle CEO Larry Ellison said last week that the Redwood Shores, Calif., company will base its Fusion CRM suite on Siebels platform, a no-brainer given Siebels functional superiority over Oracles CRM offerings, Ellison said. "Because Siebel is the category leader and understands CRM better than anyone on the planet, it actually makes development easier and less risky, and not harder," he said. "There will be some that still want Oracle CRM because its integrated, and there will be some that want PeopleSoft CRM, but there is no question that Siebel is more broadly deployed. It will be the centerpiece moving forward."

While Siebel will be the basis for Fusion CRM, Oracles Fusion ERP (enterprise resource planning) suite will be based largely on its E-Business Suite, with code from the PeopleSoft and JD Edwards suites written into the platform.

Hamerman suggested that Oracle will take a transitional approach to porting functionality from Siebel to Fusion CRM, much like Microsoft Corp. has with the rewrite of its four ERP suites into a single code base.

Others dont see the process as that simple.

"The reality is, when youre coming from two database elements, all those items need to be revisited. The moment you start to change those underlying data structures, the user interface starts to change," said Bassem Handy, director of product management at Computer Methods International Corp., in Toronto, which provides an integrated ERP and CRM suite. "What you end up buying is the client base and revenue, and you end up killing the product. To go in and try to embed these products [is folly]."

The other question that comes to the fore is which databases, beyond its own, Oracle will support with Fusion CRM. Siebels platform is agnostic, so users are not tied to a single infrastructure. That will change in all likelihood with Fusion CRM, which will definitely be a problem to those IBM DB2 and Microsoft SQL Server users who do not run Oracle.

At the same time, Siebel has had a significant development relationship with IBM, particularly with its OnDemand offering. Its suspected Oracle will distance itself from IBM as it moves forward with the integration of Siebel.

IBMs Steve Mills said last week that IBM is not concerned that Siebels software will be more finely tuned to run on Oracle than on DB2. "Granted, Oracle is not going to promote the use of DB2, but there are thousands and thousands of companies that do," said Mills, in Armonk, N.Y. "As Oracle competes in its ecosystem, there are more companies that come to IBM and want to work with us."

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