I checked in with Marc Benioff to get his response to Siebel exec Bruce Cleveland's note,
which took issue with some of salesforce.com's claims about the Siebel/Oracle mating and said that Benioff was "running scared." First, Benioff told me that all the vendors will benefit from the shaking and moving in the CRM space.
"Oracle, which is milking the license and maintenance revenue from the space, did the math and found Siebel to be good acquisition. Oracle will sell more Oracle databases. It's also good for SAP because of the confusion around Oracle's CRM products against more of a pure play like SAP. And, it's good for us because it eliminates the number one best of breed provider. We'll all generate revenue--it's only bad for Siebel customers. At some point all the Oracle products will to the new Fusion platform, but the strategy is not baked yet."
I wouldn't agree that salesforce.com's number one competitor, Siebel On Demand, is eliminated or that Oracle will just sell more databases. But, Siebel, and Oracle, have been slowed down by the acquisition. Every analyst inspecting the deal said that Siebel On Demand, which is currently optimized for IBM's DB2 and WebSphere, will have to be reconfigured to run on Oracle's stack, which won't happen overnight. Oracle CEO Larry Ellison appears to be committed to Siebel On Demand, but does that mean that the Nexus project to take all of Siebel's on premises products and make them available as on demand modules will continue as a top priority project?
According to Stuart Lauchlan [reg. required], an editor at InsightExec:
There's a big software giant gobbling up client server applications firms to fuel its own bloated marketshare. And there's a new generation of companies offering a different computing model waiting in the wings in the form of the on demand companies, such as Salesforce.com, NetSuite and RightNow.
If we count the mythic Fusion applications that have yet to appear, then Oracle now has no fewer than 7 iterations of CRM in its shop window. Alongside its own offerings, it has applications from JD Edwards, PeopleSoft and Siebel. It has to date singularly failed to convince anyone - including by all accounts senior members of its own development team - that Fusion is anything other than a convenient marketing vision. Unless it starts to put some meat on the Fusion bones and pretty quickly, it risks stalling the market. Why would anyone invest in any application from Oracle until it's clear which product line is most likely to survive and in what form.
Gartner is recommending that customers running Siebel OnDemand consider "alternative products until there is a definitive explanation of future development, sales and support plans for OnDemand." Also, Gartner warned Siebel customers and prospects against running on IBM WebSphere or Microsoft .NET until details, including financial penalties, are fleshed out.
You can expect Ellison and his right hand Charles Phillips to be very prompt in providing those details, and doing everything in their power--which is substantial--to concentrate the market and keep customers from deserting.
Regarding some of the points made in Clevelands note. He said: "Siebel Systems has added more than 500,000 ‘live’ users of its CRM applications since the beginning of 2005, while salesforce.com has added approximately 100,000 subscribers." However, apples-to-apples, Siebel added only 11,000 subscribers to its on demand product in the same period, and has a signed up a total of 39,000 subscribers over the last few years, compared to salesforce.com's 308,000 at the end of Q2. IDC estimates salesforce.com's share of the on demand CRM market at more the 50 percent, compared to Siebel's 14 percent. Cleveland note alluded to a press release that said over 100 companies have switched from salesforce.com to NetSuite. What the press release actually said was:
To date, more than 100 companies have switched from salesforce.com and other legacy accounting applications such as Intacct, Great Plains, QuickBooks and Peachtree to gain the cost savings and productivity benefits of NetSuite's One System for CRM, ERP and Ecommerce.
NetSuite (which has been funded by Ellison, who also has 4 million shares of salesforce.com) has focused more on smaller businesses and started out with an accounting product.
I'll have more next week after I talk to Cleveland to get his reaction to Benioff's latest remarks, and more insight into what he said in his note about salesforce.com...