The database giant said the deal, which is expected to close early next year, has already received the approval of Siebel’s board of directors, including founder and chairman Tom Siebel. In a teleconference call, Oracle executives said the company hopes to gain customers and expertise within the customer relationship management (CRM) market, where Siebel’s software has been widely regarded as an industry leader.
Oracle chief executive Larry Ellison said he and Tom Siebel had been in discussion about an acquisition for some time, but the PeopleSoft transaction — which involved major battles between PeopleSoft’s and Oracle’s executive teams and government regulators — put discussions on the back-burner.
“We decided we would not do any other large acquisitions until we’d had some successful quarters showing that the PeopleSoft integration had worked,” Ellison said. “We feel we’ve accomplished that. The numbers have been good.”
Tom Siebel, who worked at Oracle years ago, said the deal marks the culmination of a shift in market dynamics that started almost five years ago.
“There had been a market preference for best of breed in each of these (software) categories,” he said. “Now the customer and partner community is communicating quite clearly that what they want is an integrated family of applications that minimize their cost structures.”
According to Joel Martin, software analyst at Toronto-based IDC Canada, the Canadian CRM Market is projected to grow at 4.5 per cent over the next five years, from just under $200 million to approximately $250 million.
Martin said Oracle database users will likely appreciate tighter integration with Siebel products, particularly if they are creating the “data hubs” Oracle has been touting recently.
“As with Retek and JDE customers, you’ll see some aggressive market position from SAP, Lawon and even Microsoft to gain share,” he said, adding that the addition of both Siebel and PeopleSoft, which also had some CRM tools, puts Oracle in a leadership position in the overall CRM market. “Maintaining that is tricky, though, because everyone’s got you in their sights.”
One former Siebel partner welcomed the change. Impatica Inc., a developer of content management tools that work with Microsoft PowerPoint based in Ottawa, joined Siebel’s Alliance program in 2002, but according to president Michael Doyle, the results were less than expected.
“We were not pleased with it. They charged $25,000 (for the program) and they wouldn’t even answer our calls. We did not renew,” he said. “Siebel’s gone through some pretty turbulent times . . . I think it’s probably a very positive thing. Oracle’s such a stable organization.”
Siebel once counted Microsoft as a major partner, signing a three-year deal with the software giant to work towards greater interoperability between their products. That deal is expected to expire this year.
Though product integration issues will only be resolved once the deal is closed, Siebel’s key software products will likely find their way into Oracle’s 11i E-Business Suite, which also includes modules for enterprise resource planning, content management and supply chain management. Ellison praised Siebel’s On-Demand hosted CRM offering, adding that bringing Siebel into the fold would be “infinitely easier” than was the case with PeopleSoft, which was itself busy integrating J.D. Edwards while the Oracle takeover was in progress.
“We know a lot more about Siebel than we do about PeopleSoft,” he said. “Siebel isn’t the amalgam of two companies that just recently got together. Overall, there is very little integration risk involved.”
Oracle has said customers will see the full benefit of its acquisition spree when it completes Project Fusion, which will meld the best of PeopleSoft, JDE Edwards and a host of smaller companies Oracle has swallowed up. Martin, however, said its growth strategy may Fusion more complicated than Ellison expects.
“Oracle has said it will have Fusion ready by 2008. If it keeps gobbling up major companies like Siebel, how it can possibly keep that date?”
Siebel recently said it plans to host a new user event called CustomerWorld that would feature presentations from clients such as Peppers & Rogers Group, Key Corp. and Virgin Mobile USA. The event is to take place next month in Boston.
–With files from Howard Solomon