Oracle swallows CRM rival Siebel

Oracle’s acquisition spree has stepped up a gear. The software giant last week stunned the industry by announcing its capture of rival firm Siebel Systems for US$5.8billion.

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By  Peter Branton Published  September 18, 2005

Oracle’s acquisition spree has stepped up a gear. The software giant last week stunned the industry by announcing its capture of rival firm Siebel Systems for US$5.8billion. Siebel is one of the key companies in the customer relationship management (CRM) software market, a market tipped by analysts to be worth more than US$10billion in the next five years. Oracle claimed the capture of Siebel will make it the leading CRM company in the world. The deal sees Siebel chairman Thomas Siebel reunited with former boss Larry Ellison, although it was not immediately clear how long for. Siebel left Oracle after disagreeing with its controversial CEO about the potential market for software that could help handle customer calls. In 1993, he co-founded Siebel and helped establish the CRM market as a major business sector. While Ellison said after the deal was announced that Siebel could stay at the company, he is expected to leave again, albeit considerably wealthier. The move to capture Siebel is not entirely unexpected: Ellison had disclosed that it was a potential takeover target during hearings about Oracle’s protracted takeover of PeopleSoft. However, with that deal —worth US$10.3billion — only having closed in January, the timing of the move for Siebel is something of a surprise. Oracle was already facing considerable integration challenges with its own application product range and those of PeopleSoft and JD Edwards (which had been acquired by PeopleSoft prior to its takeover by Oracle). It has also made other purchases this year, including retail software maker Retek for US$500million in April. In a conference call, Ellison said that the timing was right for the move, claiming that the PeopleSoft acquisition is now largely completed. As part of that process, Oracle has committed itself to an ambitious product to merge the best of Oracle’s, PeopleSoft’s and JD Edwards’ technology into a single product line: Project Fusion. That project will now have to incorporate Siebel technology as well, with Ellison making it plain that its CRM products will take priority: “Siebel will be the centrepiece of our strategy going forward,” he said. “We will continue to sell PeopleSoft CRM, Oracle CRM, but Siebel will be the centerpiece,” he added. While Siebel has a powerful presence in the US and in Europe, it has very little presence in the region. With Oracle, arguably the region’s largest application provider, promoting its products so heavily, that situation is almost certainly going to change. “When we are selling CRM here, people will mention Siebel to us as something they have heard about,” said Ayman Abouseif, managing director for Oracle Gulf. However, he dismissed its regional presence as being “only seen on those dealers who have 15 logos on their web sites, and it is just one of the 15,” he said. “Maybe this is a chance for customers in the Middle East to get access to the technology from a vendor that is committed to the market,” Ab-ouseif continued. Understandably, rival companies are sceptical about the deal. “I don’t see how they [Oracle] can expect to digest three companies at once, they would have had problems merging the technology they already have,” said David Brierley, regional manager, Cognos Middle East.

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