Siebel gets acquired ... at last

Oracle will acquire Siebel Systems for US$5.8 billion. The long-predicted buyout will have interesting ramifications on the Australian market.

Fran Foo, ZDNet Australia
commentary In one of Silicon Valley's most predictable moves, Oracle has finally swallowed customer relationship specialist Siebel Systems.

The writing has been on the wall for some time now ... it was just a matter of when and for how much.

The road to courtship began in April 2003 when Oracle's board was presented with a list of potential targets, which included Siebel, BEA Systems, Sybase, Business Objects, JD Edwards, PeopleSoft, Lawson Software, Documentum, Cerner and SCT.

Oracle's mergers and acquisition group -- the department responsible for the list -- then went about its business trying to woo JD Edwards and Lawson but didn't succeed.

This was done behind closed doors, away from the prying eyes of the media but the secret only lasted for a year.

In June 2004, the hit list was shared with all and sundry during the United States Justice Department's antitrust trial against Oracle over its purchase of PeopleSoft. In a videotaped statement, Oracle CEO Larry Ellison said, "Tom Siebel came to my house and tried to sell me Siebel."

As soon as Ellison's startling admissions made headlines, some customers took the opportunity to re-evaluate their dealings with Siebel, but not many were that fortunate. The Commonwealth Bank and Australian Taxation Office (ATO), for instance, were already locked in.

Commonwealth Bank uses Siebel's Retail Finance application for its Internet banking service, NetBank -- which has been riddled with problems after a $100 million makeover four months ago.

From login problems to server downtime, the bank's two million Internet banking users have had to bear the brunt of "unexplained difficulties" once a month on average.

To say Siebel's software is central to these problems is unfair because the root cause is only known to the bank and its outsourcing partner EDS, which incidentally is also a major Siebel user.

Neither the Commonwealth Bank nor EDS have thoroughly explained why NetBank suffers from a high failure rate compared with competitors like the National Australia Bank, St George, and Westpac.

As all IT managers and CIOs know, sometimes it's not the technology but the people who install it.

Meanwhile, at the ATO, Siebel's software plays a crucial role in its $450 million change program. The department, which also outsources IT work to EDS, is expected to issue a statement on the deal tomorrow.

At this stage, it's unlikely that Siebel customers will be offered any answers on what will happen next. Oracle, as the suitor, holds the cards and this morning, it issued an expected response in the form of "the local office is not able to discuss this in more detail from a local perspective." This was a similar statement offered to the press when the Oracle-PeopleSoft marriage was approved.

With a string of acquisitions to show for, Oracle should be a veteran at providing clear answers on support plans, product roadmaps etc to Siebel customers. But customers might have to wait until next year when the acquisition is expected to be approved by Siebel shareholders and US regulators.

There's nothing much customers can do but sit tight and wait. Or, they can push Oracle to respond to the following comments from a competing vendor: "It's been a confusing few years for PeopleSoft/JD Edwards customers. And now, with Oracle's acquisition of PeopleSoft complete, the future is more uncertain than ever.

"We would appreciate the opportunity to put our expertise to work for you. Let us show you why leading analysts are encouraging PeopleSoft/JD Edwards customers to consider us during these turbulent times."

This message is not from SAP or It's clearly depicted on the front page of Siebel's Web site, a statement that could well come back and haunt the CRM maker and Oracle.

Are you a Siebel Systems customer? Do you think Oracle will ensure proper continuity of Siebel software or end up like PeopleSoft (support expires in 2013)? Or will we see online CRM provider gaining from this move? Send your feedback to or use the talkback feature below.

Fran Foo is ZDNet Australia managing editor.