Siebel develops CRM (customer relationship management) software. The company has about 4,000 application customers and 3.4 million CRM users, according to a statement released Monday by Oracle, of Redwood Shores, Calif.
The acquisition of Seibel is the second largest Oracle has undertaken. After an 18-month hostile battle throughout 2004 to acquire ERP (enterprise resource planning) rival PeopleSoft Inc., Oracle succeeded in taking over PeopleSoft last December. Oracle paid $10.3 billion for PeopleSoft.
As part of the PeopleSoft acquisition, which included midmarket ERP vendor J.D. Edwards & Co., which PeopleSoft previously had acquired, Oracle embarked on a major overhaul of its product lines. Dubbed Project Fusion, the effort will combine the "best of" functionality from the Oracle E-Business Suite, PeopleSoft Enterprise and JDE Enterprise One suites.
Oracle will take a similar tack with Siebel's CRM applications, according to the company. "We will embrace Siebel's best-in-class CRM product and make the features of those products the centerpiece of our Project Fusion CRM," said Oracle Co-President Charles Phillips, in a statement.
Phillips said that Oracle and Siebel's joint customers have "consistently recommended" the transaction. A majority of Siebel implementations run on Oracle's database.
Unlike the PeopleSoft acquisition, however, it's unlikely the Siebel deal will engender much rancor. The addition of Siebel's software would be more complementary to Oracle's offerings, of which CRM plays a relatively small role to date. Siebel's board of directors has voted in favor of the transaction, and the company's founder and CEO, Tom Siebela former Oracle executivehas agreed to vote his shares in favor of the acquisition, according to Oracle's statement.
The acquisition meets Oracle's two key criteria for large deals, according to Larry Ellison, Oracle co-founder and chief executive: It's immediately accretivefor the full fiscal year of 2007 Oracle expects to make more money on a pro forma basis from the acquisitionand it's strategically sound.
"This makes us number one in markets in which we already participate," said Ellison, during a conference call Monday with analysts and press. "Oracle's acquisition makes Oracle number one in sales and services in North America, and also strengthens our goal of becoming number one globally."
Currently, SAP AG is the number one business applications provider in the world, trailed by Oracle.
The deal also strengthens Oracle's relationships with two Siebel implementation partners: IBM and Accenture. Companies rely on strong system integration partner relationships to sell more software. But at the same time, Siebel's relationship with IBM brings a familiar technology question to the fore: Which databases beyond Oracle's, if any, will Oracle support with Project Fusion? Siebel is software platform agnosticthe next generation of its software currently in the works would be platform portableso that users are not tied into any single infrastructure.
That will likely change with Oracle's development of Fusion CRM, based on Siebel's products.
"If you are a person who is trying to make an enterprise strategic decisionand Siebel was your decisionand you're not an Oracle shop, this could be a problem," said Michael Moaz, Gartner vice president and CRM research fellow. "Siebel is not saying, 'we are going to migrate over to the Fusion platform.' If I'm not an Oracle shop planning on building my future on the Oracle platform, this is only a tactical decision, one that will have to be revisited," when Fusion comes out in a couple of years.
Moaz also pointed out that Oracle's acquisition of Siebel brings an end to the suite market.
"In terms of independent CRM suites, this is the last gasp of the suite market," said Moaz, in Stamford, Conn. "There are no more independents for large enterprises. It's going to be Oracle or SAP."
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