Last week Oracle announced its acquisition of Siebel Systems for US$5.85 billion. According to Oracle CEO, Larry Ellison: ?Siebel?s CRM OnDemand was one of the main motivators for the acquisition.?

However, many industry analysts believe that the acquisition is more customer-driven than technology-driven. A letter to Oracle?s customers even stated that the acquisition is customer-driven.

?We think OnDemand is going to be increasingly important. We think the Siebel OnDemand products are improving at a very rapid rate, and we intend to invest in them heavily,? continues Ellison.

Siebel?s competitor -- Salesforce.com -- tends to disagree. ?Siebel OnDemand is a joint venture between Siebel and IBM. OnDemand is written exclusively on DB2 and Websphere, and runs in IBM data centers. Oracle does not support DB2, so OnDemand will be the first product to bite the dust,? says Marc Benioff, Salesforce.com CEO.

Analysts, however, believe that Oracle has to maintain its ties with IBM, especially to keep customer deployments running smoothly. ?Oracle has to bend to its customers? needs. Should it not do this, it is not going to get the full value from buying Siebel,? says an analyst at the Yankee Group.

In South Africa however, there is a feeling that we will not see that much of an impact, and some cannot actually see the point of the acquisition.

According to Roy Blume, research manager at BMI-T: ?The acquisition really does not make sense in my book. I mean, if you look at a merger such as Veritas and Symantec, it makes sense, the two companies complement each other, and have a wealth of information to share with each other.?

He goes on to say that Oracle already has a CRM application built into its database -- albeit a very simple one. He does not quite see what Oracle is going to do with Siebel?s OnDemand CRM application. ?Apart from the fact that the acquisition pushes Oracle up to the number one application company in South America, and brings it one step closer to being the number one application vendor worldwide -- I really do not see the point of the merger.?

Blume says that the acquisition will not really affect us in SA. ?The Siebel acquisition reminds me of the PeopleSoft merger. When it happened it was on the tip of everybody?s tongue, but a couple of months down the line it was practically forgotten.?

Blume concludes by saying that Larry Ellison did not get to where he is now by getting lucky. He goes on to say that there obviously is a really good reason for the acquisition, and that we will have to wait a few months to see what Oracle actually decides to do once the Siebel acquisition has closed -- it is expected to do so early next year.