In a deal valued at $5.8 billion, Oracle Corporation has completed the sequel to this morning's merger mania (the first part being eBay's acquisition of Skype) by acquiring Customer Relationship Management solution provider Siebel Systems. Oracle's primary comment on the move -- that the acquisition will add 4,000 customers and 3.4 million CRM users to its portfolio -- is evidence that in today's highly saturated markets, acquisition is about the only way (compared to organic growth and competition) for large software companies like Oracle to significantly grow their revenues. More interesting however is how the move positions Oracle CEO Larry Ellison as the king of all-things-CRM.
In addition to the way Oracle's databases provide the underpinnings for many if not most CRM installations today, Oracle not only has its own CRM offering, Larry Ellison is also a stakeholder in two of the most prominent rising CRM stars: Siebel arch-nemesis salesforce.com and NetSuite. Having sunk $2 million into the company during its start-up days, Ellison was one of the original investors in salesforce.com. Although salesforce.com CEO Marc Benioff recently kicked Ellison off salesforce.com's Board of Directors, Ellison still has a stake in the company that Forbes recently pinpointed at $20 million. On the other hand, in the case of NetSuite, Ellison is still the primary stakeholder. About the only CRM darling that Ellison doesn't have a stake in is the Bozeman, Montana-based Rightnow Technologies.
Acquiring Siebel brings Oracle's total number of acquisitions (or announced acquisitions) for 2005 to nine. The company even has a Web page that's dedicated to its acquisition strategy. While ingesting software giants (anyone remember PeopleSoft and J.D. Edwards and will BEA make it an even 10?) is becoming an Ellison past-time, Oracle is also sending a clear message to Bill Gates and Steve Ballmer that if Microsoft is really serious about stepping up it's presence in the CRM market, that the Redmond-based company is going to have an huge fight on its hands. Not only doesn't Oracle want to see Microsoft make major inroads into the CRM market, it wouldn't want those inroads to threaten Oracle's crown jewel: the database market. CRM systems rely heavily on database technology to do what they do and it isn't difficult to envision Microsoft's CRM offerings establishing a preference if not a reliance on it's database solution SQL Server.
From my point of view however, the part of this deal that should ignite the best water cooler discussions is it's size. Imagine this: Oracle buys Siebel for $5.8 billion. Siebel has been around for long time. The company is public, has a huge installed base, and lots of customers and employees. Meanwhile, after only three years in existence, Skype gets swept up by eBay for $2.6 billion. How amazing is it that the young, tiny Skype is worth nearly half of what Siebel is?More Commentary: