Oracle takeover spooks Siebel customers

Oracle’s takeover of Siebel, announced on 12 September, has sparked fears within the UK Siebel user community that support will be dropped, maintenance costs will increase and they will be forced to adopt Oracle’s CRM products.

Siebel is the latest in a line of acquisitions by Oracle, following the capture of JD Edwards and PeopleSoft, and will enhance Oracle's existing collection of middleware applications.

Even before the Siebel takeover, Oracle had embarked on a major overhaul of its product lines. Dubbed Project Fusion, the effort is meant to combine the best of functionality from the Oracle E-Business Suite, PeopleSoft Enterprise and JDE Enterprise One suites.

It is not yet clear whether the supplier intends to blend Siebel and its other acquired CRM products into one application, but some UK IT managers are worried.

Martyn Tinsley, Siebel development and support manager at Leeds City Council, said he has some concerns about the takeover, which he felt could also potentially have a positive impact on the CRM space.

"As a large customer of Oracle and Siebel we are concerned. An issue we have is that Oracle ceases support for new products very quickly and Siebel supports old applications for a long time, so there is this difference in mentality of the two suppliers," said Tinsley, adding that the marketing material he has received has suggested that Siebel will be the primary application in Oracle's Fusion Suite.

Tinsley was also concerned that potential staff losses could impact the level of support Leeds City Council receives. He hopes that all technical staff will be retained following the takeover.

Mark Pitcher, systems manager at Rotherham Metropolitan Borough Council, admitted he was also very concerned about the acquisition — which could force him to migrate to another supplier.

"At the moment we are using Siebel on an SQL Server database so this could have major implications if Oracle starts trying to make us move to Oracle applications," Pitcher said.

Other users are worried that their hefty investments in Siebel software will be pointless if Oracle re-engineer the technology, or force customers to migrate to Oracle platforms.

Jo Williams, head of information at Tower Hamlets London Borough Council, believed the move spelled disaster for loyal Siebel users. "We have spent a lot of time and money installing Siebel and we are not going to be happy if Oracle forces us to change applications. How quickly they force us to re-implement, or if Oracle buy up most of the other CRM vendors, remains to be seen," she said.

Some industry experts believe the takeover could lead to turbulence in the industry.

Sharon Mertz, analyst at Gartner Research, warned of future instability within the CRM market. "Buyer indecision or difficulty closing the deal may create volatility in the significant part of the market represented by PeopleSoft and Siebel, which hold 17.4 percent of the market share between them (equal to the market share of the current leader, SAP)," she said in a statement.

"This environment could negatively impact the compound annual growth rate (CAGR) of the CRM market by as much as two to three percentage points as Siebel and PeopleSoft customers either move to other vendors or wait for Oracle to deliver Fusion, its next-generation application suite and underlying technology stack," Mertz added.

But an analyst at AMR research said users would benefit from the acquisition as Oracle would continue to support Siebel.

"It’s the latest in a string of acquisitions Oracle has made to grow its applications business. For Siebel and its customers, this acquisition offers a graceful exit strategy. Siebel founder and chairman Tom Siebel acknowledged that there has been a ‘shift in market dynamics’ with more customers opting for integrated application suites from Oracle and SAP rather than the best-of-breed systems that Siebel offers," the analyst.

"We expect Oracle to sell, support, and enhance the current Siebel products for many years, even as they work to incorporate Siebel’s functionality into the next-generation Fusion product line. Oracle has gained credibility by providing strong support and enhancements to its recently acquired PeopleSoft customers, which should reassure Siebel customers," he added.

Tinsley agrees that the acquisition has the potential to benefit the CRM space. Siebel could benefit from a larger research and development budget, and may offer better integration with Oracle products in the future, he suggested.