September 13, 2005 (IDG News Service) --
Oracle Corp. stands to gain not only industry-leading customer relationship management (CRM) functionality but also additional clout as one of the handful of IT giants left standing in an increasingly consolidated industry through its planned acquisition of Siebel Systems Inc. for $5.85 billion, analysts said.
Meanwhile, Siebel customers appear to be cautiously optimistic about the effect of the news on their technology investments (see "Users see potential in Oracle-Siebel deal").
"Where does this put Oracle? Right in IBM's face. Nobody can argue with Oracle's scale now," said James Governor, an analyst at RedMonk in London.
The move is a good deal for Oracle, agreed David Bradshaw, an analyst at Ovum Ltd., also in London. "This vaults them to No. 1 in the CRM market," he said.
Oracle is also gaining a steady revenue stream and a stronger foothold in the hosted, subscription applications business through the Siebel acquisition, said Paul Hamerman, vice president of Forrester Research Inc. in Cambridge, Mass. "This is more about acquiring customers than acquiring technology, for the profit stream of maintenance revenues," he said. San Mateo, Calif.-based Siebel's OnDemand hosted product was also attractive to Oracle, which has experimented with hosted applications but hasn't gone forward with a subscription application.
The news, announced yesterday (see "Update: Oracle to buy Siebel Systems for $5.85B"), was not unexpected by analysts or customers: Hamerman noted that Siebel had been struggling and was in need of a turnaround. He was surprised only by how quickly Oracle moved.
Siebel customer Rob Verratti, senior vice president at WestStar Bank in Vail, Colo., said the acquisition seemed inevitable.
Verratti, whose bank deployed a 100-seat implementation of Siebel's Professional Edition for small and midsize businesses last year, doesn't anticipate changes in the short run, assuming that maintenance of the products continues. "I hope that Oracle in its drive to expand continues to focus on the midmarket sector and continues to invest in R&D for midmarket companies," he said. Customers could benefit in the near-term as enterprise software companies continue to make acquisitions and invest in midmarket companies and research and development, Verratti added.
"In the long run, as there become fewer and fewer companies in the market, customers could potentially face higher prices and fewer choices," Verratti said.
The ongoing industry consolidation -- of which Siebel's absorption by Oracle is the latest example -- can have benefits for users, suggested American Red Cross CIO and Senior Vice President Steve Cooper. "It's one less vendor we have to coordinate with," he said. "It's easier from a management standpoint."
Cooper acknowledged that most CIOs who have been in the business for years have had an "up
Learn-Fast Guide: Software as a Service is Growing Up
Download this Computerworld Executive Briefing, a $195 value, for free! Compliments of Akamai. (Source: Computerworld) SaaS is here to stay as an application delivery channel. You will be using it, but will you do so wisely? This Learn-Fast Guide will prepare you for software delivered over the Web. From security issues to contract negotiations, there's a lot to consider ... and a lot to gain. Download this executive briefing
Rapid application development, rapid results
Download this special report now! (Source: Intersystems) All too many businesses suffer from IT infrastructures that are a hodge-podge of disconnected databases and applications. What's needed is the ability rapidly develop connected applications under a unified service-oriented architecture. InterSystems Ensemble integration environment and Cache database are effective tools in answering this need, delivering a rapid ROI. Download this white paper
Moving to Windows Vista: The Promise, The Reality
Moving to Windows Vista: The Promise, The Reality View this exclusive webcast today! Go to the webcast
White Papers
Read up on the latest ideas and technologies from companies that sell hardware, software and services.
See your link here
Subscribe to
Computerworld 
or
Other CRM Stories
IDG.net
Download this Computerworld Executive Briefing, a $195 value, for free! Compliments of Akamai. 
Download this special report now!
Moving to Windows Vista: The Promise, The Reality
Read up on the latest ideas and technologies from companies that sell hardware, software and services. 
Best Places to Work in IT
Computerworld