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SAP-Oracle Battle Heats Up

With the dust still settling from Oracle’s US$5.85 billion purchase of Siebel Systems, SAP is taking a run at Siebel customers, hoping to capitalize on what it calls “uncertainties” about the future of Siebel after Oracle takes control.

But Siebel is going on an offensive of its own, telling customers and re-sellers at its annual sales conference that Oracle is committed to letting Siebel continue to innovate in the customer relationship management (CRM) space.

Tug of War

SAP said it was extending its “Safe Passage” program, which offers applications, technology and support on the SAP platform for companies running Siebel software. SAP said Siebel customers may find themselves facing questions about the future of their applications and cited the example of PeopleSoft, which Oracle acquired after a bitter battle.

“Customers have a mandate to grow their businesses today,” said Bill McDermott, president and CEO of SAP America. “They cannot afford to wait until 2008 or 2010 or 2013 to see if the merged software code of Oracle’s multitude of acquired companies yields a viable product.”

McDermott suggested that even if Siebel’s products are not phased out, the changes may keep Siebel from keeping customers happy. “We are entirely focused on delivering value to our customers now and are not distracted by the challenges of integrating multiple code bases, companies and corporate cultures,” he added.

In announcing its acquisition of Siebel, Oracle made it clear it would keep Siebel’s CRM applications in place, but would seek to combine them with its own technology where possible.

The situation for PeopleSoft customers was more bleak by comparison, with Oracle all but announcing its intentions to discontinue some of that company’s product lines after it took over. Amid that turmoil, thousands of PeopleSoft customers were seen jumping to competitors.

Fishing Lure

SAP has long offered Safe Passage to customers of Oracle, PeopleSoft, JD Edwards and Retek. The program includes advice on shifting platforms, with suggested roadmaps for making the transition.

Meanwhile, Siebel used its sales confab to reassure customers and partners. Oracle CEO Larry Ellison addressed the crowd gathered in Boston for the event via video conference, saying that Siebel “will be the foundation for Oracle CRM going forward.”

Siebel also rolled out what it’s calling Customer Adaptive Solutions, a network architecture for using Siebel products and services that will allow faster changes to meet evolving business needs.

Analysts said the approach was meant in part to make it more difficult for customers to change CRM applications by building more tools into a single architecture.

Let the Churning Begin

Analysts also believe that as with the PeopleSoft purchase, SAP stands to gain as Oracle takes over Siebel, a move that inevitably will cause anxiety among customers.

Gartner analyst Sharon Mertz said there is plenty of room for movement by customers of Siebel as the Oracle deal moves forward toward an early 2006 close — assuming it gets clearance from anti-trust regulators.

“Buyer indecision or difficulty closing the deal may create volatility in the significant part of the market,” Mertz told CRM Buyer. The overall CRM market may also suffer, if customers decide to bide their time and use legacy systems until the smoke clears, she added. “This uncertain environment could negatively impact the growth of the CRM market.”

This story was originally published on Oct. 17, 2005, and is brought to you today as part of our Best of ECT News series.

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