Oracle rallies the Siebel troops

SAN FRANCISCO – Oracle Corp. used its OpenWorld conference this week to line up partners and customers to endorse its planned acquisition of Siebel Systems and to pledge support for its hosted customer relationship management strategy.

In the exhibit hall of the Moscone Center where OpenWorld is being held, Oracle has set up a special booth where interested attendees can ask questions about its purchase of Siebel, which was announced last week as a US$5.85-billion deal. In a “town hall” meeting to discuss the transaction on Monday afternoon, Oracle president Charles Phillips said the most popular question was, why will take until next year for the acquisition to be completed?

“There are a lot of regulatory things we have to go through. That’s what’s dragging this. It’s not us,” he said, adding users have been almost universally positive about the deal. “It certainly beats the other way we had to do it last time,” he added, referring to Oracle’s hostile takeover for PeopleSoft/J.D. Edwards.

George Sheenan, Siebel‘s president, said the key benefit for Siebel’s existing customers is an expanded product footprint that will include a range of applications offered in Oracle’s E-Business Suite.

“We like to think we’re bringing a lot to this dance as well,” he said, noting Siebel’s estimated 3.4 million users. He also observed that Siebel, like Oracle, has for several years been tailoring its software to specific industry verticals such as health care, pharmaceuticals and call centres. “We have a lot of complementary product attributes.”

Juergen Rottler, executive vice-president of Oracle On Demand, agreed, pointing out that Siebel On Demand, a program by which Siebel offers customer relationship management (CRM) software as a service, is similar to utility computing models Oracle has been selling since the late 1990s.

”We learned that CRM on demand might become HR on demand, finance or other types of on-demand customers,” he said. “We’ve been doing hosted CRM for some time, but we’ve tended not to talk about it in isolation.”

Siebel’s software is expected to be incorporated into Oracle’s effort to integrate the best features and functionality of the products it has developed internally or gained through acquisition, called Project Fusion. Jim Hayes, global managing partner of consulting firm Accenture, said the addition of Siebel could bring improved analytics to many enterprise IT systems.

“We’ve spent the past decade putting in ERP systems to make the back office more efficient. Now we have to make it more effective as well,” he said. “We also have to do that in the front office, and Siebel will be a part of that.”

Not all Siebel users are enthusiastic about Oracle’s purchase. Scouts Canada, for example, is not an Oracle shop but has been using Siebel’s MidMarket Edition 6.2.3 middleware as part of its membership management system.

“I am worried that they will try to force us to move to the Oracle database, because we use Microsoft SQL Server 2000,” said Ron Loves, director of information at Scouts Canada in Ottawa, who is not attending OpenWorld this year but spoke by phone. “That would be our primary concern, I would say.”

Once the deal is closed early next year, Siebel customers will find themselves exposed to a variety of user groups that have built up around Oracle as it integrated PeopleSoft and J.D. Edwards into its operations. This includes the Oracle Applications Users Group, the Qwest User Group (formerly aimed at J.D. Edwards users) and a number of sub-groups aimed at market segments such as retail. John Matelski, the Deputy CIO for the city of Orlando and an executive board member of the International Oracle Users Council, said Oracle tends to offer more autonomy to user groups than some software firms, and that Siebel users will likely welcome the chance to exchange ideas with their peers running other platforms.

“They’re going to have options, they’re going to have choice,” he said. “They’re not going to be forced to do anything.”

Phillips said that the variety of products Oracle now owns means it can’t simply push its own software above those it has acquired. He said the company has developed a “playbook” for its sales force that suggests which products might best suit which markets. “We know, for example, that PeopleSoft tends to be really good for state and local governments,” he said, adding that ultimately customers will be given the choice of the best products to fit their needs.

In a phone interview, James Goodnight, chief executive of Cary, N.C.-based SAS Institute Inc., said that he doubted Oracle’s last few acquisitions were driven by anything other than a desire to dominate marketshare.

“I think Larry Ellison is interested in growing by doing customer acquisitions. Even though he has software that does similar things as PeopleSoft and J.D. Edwards, he was just buying market share. That’s pretty much what he’s doing with (Siebel). He wants to be as big as SAP,” he said. “I just don’t think of Siebel as a big player. They’ve been going downhill for the last few years.”

Oracle OpenWorld runs through Thursday.

–With files from Neil Sutton

Comment: [email protected]

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