Siebel Denies Early Demise of CRM OnDemand

By John Pallatto  |  Posted 2005-09-16

Siebel Denies Early Demise of CRM OnDemand

Siebel Systems Inc. officials denied market predictions this week that its hosted customer relationship management application service would have a short life span in the hands of its prospective new owners Oracle Corp.

After the buyout was announced on Monday, Siebel found itself the butt of competitor gibes and analysts predictions of doom based on the oft-repeated prediction that Oracle was mainly interested in Siebels customer base and had little interest providing long term support for its product line.

Detractors, led by key competitor CEO Marc Benioff, predicted that Oracle Corp. would rapidly phase out Siebel CRM OnDemand after it closed its proposed $5.85 billion buyout of the company because the product was developed in a partnership with IBM to run on IBMs DB2 relational database, a direct competitor to the Oracle database.

However, there is nothing preventing Siebel from porting CRM OnDemand to other the Oracle database, said Bruce Cleveland, Siebels senior vice president, said Thursday.

The OnDemand package was developed on the Siebel 7.5.3 CRM suite, which "which can run on virtually any application server and any database," Cleveland said in an interview on Thursday.

As part of its partnership with IBM, Siebel agreed to run CRM OnDemand on DB2 and WebSphere. But there is no technical or legal reason why Siebel couldnt make the same arrangement with Oracle or other companies, Cleveland said.

Click here to read to read why industry analysts say Oracle faces a complex CRM integration task with all its recent corporate acquisitions.

Comments by Oracle CEO Larry Ellison during the acquisition announcement Monday indicate that the company has no intention of downplaying or phasing out any Siebel product, Cleveland noted.

The Siebel-OnDemand products "are improving at a very, very rapid rate, and we intend to invest in them heavily," Ellison said Monday. "We expect that all of the Siebel product features and functions that they have in the software products will migrate to the OnDemand products," Ellison said.

While Siebel has faced more competition from hosted CRM applications like, Siebel is still far larger and has added far more new users for its CRM products, Cleveland said.

Siebel claims that it has added 500,000 new users for all of its CRM products in 2005 while has added 100,000 to a total of 308,000 during the same period.

Next Page: Holding an anchor position.

Holding an Anchor Position

The Siebel CRM applications are strong enough in the market that "they will likely hold an anchor position in any Oracle suite going forward," said Denis Pombriant, principal manager of Beagle Research, a CRM industry analysis firm in Stoughton, Mass.

Pombriant agreed no that there was no reason why Oracle couldnt keep supporting the current Siebel OnDemand hosted product as well as offer the product on Oracle or other platform for that matter.

This is an important consideration move because hosted applications are part of the utility model of enterprise computing that many organizations are starting to explore, he noted.

"The future of enterprise computing lies in the utility model," he said. How long it takes us to go from the conventional model to the utility model is a big question mark."

That means that Oracle has many decisions to make and a lot of work to move its product line in that direction, he said.

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Even if Siebel holds down the CRM position in Oracles Project Fusion product line, Oracle still faces a daunting integration process for all of the sales force automation and CRM products it has acquired in its prolong buyout campaign, Pombriant said.

"As a practical matter in the short term, they might be able to service and support all of those packages," he said. "But at some time in the not-too-distant future, they will need to consolidate. The best way to consolidate is take the majority of these CRM systems and sunset them," he said.

PeopleSoft, J.D. Edwards, Siebel and Oracle customers are all going to be intensely interested in which of these products fall by the way side, and that is why Oracle shouldnt keep the market in suspense too long, he said.

However, Siebel and PeopleSoft customers shouldnt be concerned that Oracle will act precipitously to downgrade support for the products that it has acquired in the past year said, Wayne Kernochan, president of Infrastructure Associates, a market research firm.

"At the very least, customers of Siebel ought to be reassured by what Ive seen so far of the way Oracle has treated PeopleSoft customers," Kernochan said.

Oracle has made commitments as to how it will support the PeopleSoft products, and he said he expects Oracle will follow through on the commitments it makes on the Siebel products.

There is no indication that Oracle is going to let Siebel OnDemand or the other products just wither on the vine, he said. In fact it is possible Oracle will deal with the products it has acquired in the same way that IBM dealt with the Informix database that it acquired four years ago.

IBM just didnt just support Informix in the condition that it acquired it, it continued to develop and extend the code base, he noted.

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