Users see potential in Oracle-Siebel deal

Von Marc L.

Users are unsure of just how the Oracle Corp."s US$5.85 billion buyout of ailing Siebel Systems Inc. will play out for them, but some IT shops were openly optimistic about the deal announced Monday morning. Siebel"s CRM products are seen as feature-rich and highly mature, something Oracle believes it can exploit as it crafts its next generation set of best-of-breed applications, which it has dubbed Fusion.

"Overall, the acquisition should bode well for us," said Bonnie Henn-Pritchard, assistant vice president of applications development at the Burlington Northern and Santa Fe Railway Corp. The Fort Worth, Texas-based railroad runs Siebel CRM and analytical applications, as well as the Oracle database for some third-party systems. However, IBM is the railroad"s infrastructure software provider of choice, Henn-Pritchard said. The company uses IBM"s DB2 database to support its Siebel installation.

Henn-Pritchard noted that Siebel had suffered from challenges in growth, organizational stability and market performance, and she said she hopes the strategic move by Oracle will mean more money and resources for Siebel software. She also said her company plans to watch closely as Oracle integrates Siebel into its ERP applications portfolio.

"This news is very positive for us," said Mitch Myers, vice president of operations at F.W. Murphy Control & Instrumentation Solutions in Tulsa, Okla. The company, which runs J.D. Edwards & Co. applications that are now part of Oracle"s offerings, used Siebel software when it was a J.D. Edwards partner. However, Murphy later unplugged the Siebel installation so his company could deploy CRM software that was integrated closely with the J.D. Edwards ERP suite. Myers believes the Oracle acquisition will improve Fusion even more.

The independent Oracle Applications Users Group (OAUG), which is based in Atlanta, also gave the deal the thumbs up. "The OAUG supports Oracle"s acquisition of Siebel because the merger will make Oracle more competitive and enable Oracle to further develop the quality of new products and provide even better services to users," said Pat Dues, president of the organization.

A couple of Oracle users offered some caveats to the deal.

"I"m sure it"s good from a technology standpoint, since CRM should be integrated with ERP for both to function optimally," said Dave Hyzy, director of IT at Benderson Development Co. in Buffalo, N.Y. The company uses J.D. Edwards & Co."s World green screen applications, which Oracle acquired when it bought PeopleSoft.

Because this deal leaves one fewer competitor in the market, that"s not good for software costs, Hyzy said.

"I am concerned that Oracle"s eyes might one day prove bigger than their stomach," he said. "As an Oracle customer, having recently been digested [when PeopleSoft was bought], the fear is that they are spreading their resources so thin that they will ultimately be forced into some kind of Draconian response to all the resultant chaos, with the existing customers bearing the brunt."

"This was a total surprise," said John Schindler, CIO at lighting fixtures maker L.D. Kichler Co. in Cleveland, a PeopleSoft Enterprise shop. "I can see what Oracle is trying to do, I just don"t know how they are going to bring all this disparate technology together in Fusion." Nevertheless, he said the deal now gives his company the option of investing in Siebel software.

"I really want an integrated one-stop, one-point-of-truth solution versus best of breed," he said.

Analyst David Dobrin of Cambridge, Mass.-based consultancy B2B Analysts Inc. noted that the price paid for Siebel was "more than fair," but he fears that this deal might stifle CRM innovation. It also will affect customers, "whose support will suffer when the product goes into maintenance mode."