Oracle Acquires Siebel Systems

By Geoffrey James

If you use CRM software from Oracle, Peoplesoft or Siebel get ready for some major changes. On September 12th Oracle announced an agreement to buy Siebel Systems. As part of the announcement, Oracle CEO Larry Ellison delivered the top-line assessment of the deal: "In a single step, Oracle becomes the number one CRM applications company in the world." With the acquisition, Oracle gains 4,000 new corporate customers, although many run Oracle elsewhere, and 3.4 million new CRM users.

Soon-to-be-erstwhile chairman of Siebel Systems, Thomas M. Siebel tried to put a happy spin on the deal, characterizing the announcement as "a great day for Siebel Systems’ customers, partners, shareholders and employees [because] the combination of Siebel applications with the development capacity of Oracle to enhance our CRM product set assures our customers continuing success." So, what was he supposed to say – that Siebel management had about as much chance of fighting off a hostile Oracle takeover as Pee Wee Herman would have against Mike Tyson in a boxing ring?

What does this acquisition mean to users of CRM software from Oracle, Peoplesoft or Siebel? First, there’s no way that Oracle is going to support three different CRM platforms. There was a slim possibility of dual development paths when Oracle acquired Peoplesoft because the market shares of PeopleSoft CRM and Oracle CRM were virtually identical. With the acquisition of Siebel, however, Oracle has identified a clear path for both PeopleSoft CRM users and Oracle CRM users.

In other words, PeopleSoft CRM is probably a dead duck. Users should expect to undergo an expensive and painful conversion in the near future. Oracle CRM also is an endangered species, but it will take Oracle longer to do it in because it’s integrated into Oracle’s larger enterprise product set. What probably will happen is that Oracle will throw programmer resources at integrating Siebel more closely with the Oracle product set as a proposed upgrade to Oracle CRM. Therefore, users of Oracle CRM can expect to undergo an expensive and painful conversion process as well.

Are Siebel CRM users sitting pretty, then? Not really. As Oracle’s corporate focus shifts to the Siebel platform, executives and technical experts assigned to Oracle CRM and the remnants of PeopleSoft CRM will attempt to force themselves into positions of power in whatever CRM development organization emerges from the chaos. If this merger is like every other merger of two large software firms, there will be months of infighting, backbiting and political maneuvering. Because that turmoil will distract managers and top technicians from their primary job of developing stable software, the almost certain result is one or more software releases that aren’t entirely stable.

There are some upsides to the acquisition, though. Oracle is no piker when it comes to research and development and some of the company’s engineering cash will go to making OraPeoSie CRM 2008 – or whatever it turns out to be – a world-class product. Furthermore, as the second largest independent software company in the world, Oracle has an enormous global support infrastructure with a greater reach than Siebel ever had. Ultimately that means a better product and better support for whatever product emerges from the corporate maelstrom.