Siebel to bolster on-demand Oracle

The strategy is aimed at helping Oracle grow its hosted CRM customers, but the software company won't say if it will re-host Siebel OnDemand assets currently on IBM data centers.

SAN FRANCISCO--Siebel Systems' OnDemand business will bolster Oracle's own hosted applications service after the merger, particularly in the CRM space which the latter had been unsuccessful in capturing, says a top company official.

"From what we've seen, what (Siebel) built was very impressive and that will give us more momentum," Oracle President Charles Phillips told reporters, during a briefing Monday at Oracle OpenWorld customer conference in San Francisco.

The lanky head honcho, however, did not reveal if the company will re-host Siebel's on-demand applications, which run on DB2 and WebSphere platforms in IBM data centers. He added the decision will only be made when the acquisition is completed next year.

And if the merger between the two companies pulls through, Siebel's OnDemand CRM (customer relationship management) business will make Oracle the largest hosted application vendor in the world, he noted. The company currently has about 500 customers worldwide from its own "software-as-a-service" business, he said.

"We are hosting entire infrastructures, mainly in financial and human resource (applications). We have some large customers running their back-office on our data centers in Austin," Phillips said, adding that Oracle has been in the on-demand business for five years.

So far, Oracle's on-demand business is growing at about 60 percent a year, he noted. "Siebel will help us even more, because CRM is one area where we didn't have a lot of hosted customers," he said.

Siebel CEO George Shaheen gave his assurance that his customers were pleased Oracle would continue to support their on-demand investments because they want the flexibility of a hosted CRM solution.

Addressing the audience at OpenWorld, alongside Phillips, Shaheen said: "Most importantly, they are happy that Siebel CRM will be the cornerstone of Oracle's Project Fusion CRM strategy."

As a sign of things to come, Phillips said that Oracle could integrate back-office ERP (enterprise resource planning) applications with CRM in an entirely hosted environment.

According to a Gartner report released about the merger announcement, Siebel OnDemand customers should consider alternative products until there is a definitive explanation of future development, sales and support plans for OnDemand.

The research firm also predicted that Siebel's CRM offerings will emerge as the blueprint for at least 80 percent of Project Fusion's CRM features by 2008.

This view was rejected by Mark Gibbs, senior vice president for applications at Oracle Asia-Pacific.

Gibbs noted that Oracle will take best-of-breed features from other acquired CRM suites, and Siebel's offerings may not necessarily make up 80 percent of Oracle's next-generation CRM suite.

In addition, the Gartner report noted that Oracle E-Business Suite CRM, PeopleSoft CRM and JD Edwards EnterpriseOne customers may also expect less focus on new features before 2008.

But according to John Wookey, Oracle's senior vice-president for applications development, this will not be the case as long as there is customer demand.

Wookey said: "I think there is a concern that innovation only comes from two vendors living across the street of each other. Sometimes, we spend so much time worrying about what the other vendor is doing, that we stop figuring out what customers need to be successful."

"The more time I spend with customers, the more great ideas I get, and that's where the good things come from," he said.

Gibbs also gave Asia-Pacific reporters at OpenWorld, a small glimpse of Oracle's plans for the region after the Siebel merger is approved. Like previous acquisitions, he said, the company would engage Siebel customers in the Asia-Pacific on Oracle's post-merger strategy as soon as possible.

On Oracle's sales strategy, Gibbs said Oracle would only promote new product releases within the same brand and product line. But for new customers, he added, Oracle would try to sell the product that is best in its category.

ZDNet Asia's Aaron Tan reported from San Francisco, USA.