Oracle-Siebel: Companies Comment

September 12, 2005

While Oracle’s chief executive, Lawrence Ellison, has to pay $100 million to resolve a lawsuit charging him with insider trading ($900 million of shares worth), companies are already weighing in on today’s other announcement regarding the business software company’s acquisition of CRM provider Siebel, in a deal worth about $5.85 billion in cash and stock.

�

Oracle said the companies’ joint customers have recommended the transaction to both of them for more than a year.�

�

KANA, a provider of service resolution management (SRM) solutions, agrees that this is a positive purchase. EVP of corporate strategy Brian Kelly weighed in. To the media, Kelly had this to say:

�

“With the acquisitions of Siebel, Oracle is truly becoming a main player in the CRM market. In reality, many organizations we work with already have Siebel, Oracle or both installed. However, to make true improvements to the customer experience, companies will still need to layer applications like KANA on top.

�

The acquisition of Siebel by Oracle means that the two companies will be focused on integration for at least the next year, and less so on creating new technology -- which opens even more opportunity, and decreases competition for KANA.”

�

Kelly further told TMC: “We see the Oracle/Siebel acquisition as a great opportunity for KANA.� As well as leaving us in a great position to cement our leadership in customer service, it’s also set to spark a real transformation in the technology companies use to look after and grow their customers. It’s an exciting time for CRM!”

�

TMCnet Editor-in-Chief Rich Tehrani, on the other hand, is likely less inclined to see it that way, according to his opinion piece regarding the announcement this morning:

�

“Others will argue that in a world where integration becomes more and more important, Oracle will be able to leverage Siebel and have it talk seamlessly with other applications in the company’s portfolio. Yes, that is true but it removes the best of breed argument IT managers make when deciding what products to purchase. How can you have best of breed products from the same company? It just doesn’t work like that.”

�

Finally, apparently salesforce.com CEO Marc Benioff had a bit to say about this news, in an internal memo apparently issued to all salesforce.com employees:

�

“Oracle put Siebel investors out of their misery today.�We have been doing that for Siebel customers for years.�Our announcement today at Dreamforce will accelerate that. It’s the end of software.�Client/Server software is being consolidated by Oracle just as mainframe software was consolidated by Computer Associates. Oracle’s strategy is simple, instead of innovating, buy as much installed software as possible, call it all Oracle Fusion, and make sure it all uses Oracle’s database.

�

Now, the same thing that happened to Peoplesoft will happen to Siebel, it will die.�Customers will look for new solutions and new providers.�Employees will look for new employers. Siebel on Demand, a joint venture between Siebel and IBM, will be the first to be buried. Siebel on Demand is written exclusively on DB2 and Websphere and runs in IBM data centers. Oracle will kill it.� Oracle does not sell DB2.

�

Now, the opportunity to be the global leader in the CRM market has opened for salesforce.com.� Our dream is becoming a reality as the world will move to new on demand solutions. Already the fastest growing public CRM company in the world, with over 50% market share in On Demand CRM, salesforce.com is well poised to become the world’s new global CRM leader.

�

It is auspicious that this is the very day that we are announcing our new strategy at Dreamforce with AppExchange�[...] and our Winter ’06 release.

�

Aloha, Marc”

�

What do you think, dear readers: an innovative integration, the death of software, or the bastardization and complete lack of concern for CRM customers?

�

---�

DRB