Siebel, Oracle sooth worried customers

Siebel, Oracle sooth worried customers

Siebel Chief Executive Officer George Shaheen shared the stage with a group of Oracle executives Monday at Oracle's OpenWorld conference, a tableau Oracle President Charles Phillips joked that attendees likely never expected to see.

The group assembled for a hastily arranged town hall meeting aimed at explaining the benefits both companies anticipate from their US$5.85 billion union, announced last week.

Oracle enlisted an extensive roster of executives, customers and partners to testify about the synergies between once-bitter rivals Oracle and Siebel, and the resources Oracle will devote to ensuring a smooth transition for Siebel's customers. As he did during his keynote address Monday morning, Phillips spoke about Oracle's intention to pick off the best features from each of its applications lines to incorporate into its new, forthcoming Project Fusion applications suite.

"We can't take anything away if we expect people to upgrade. It's got to be a superset," he said, in a discussion of the functionality customers can expect from the new Fusion applications.

Phillips also pledged again to support customers on whatever applications they currently run. At least until Project Fusion's release, Oracle will preserve the brands of its acquired applications and continue selling them. Oracle's sales team has a playbook detailing each product line's strengths; for example, PeopleSoft's long history in the state and local public sector markets means its applications will often be the ones Oracle suggests to new customers in those industries, Phillips said.

One joint Oracle Siebel customer attending the meeting, Fujitsu Principal Business Solutions Consultant Debra Lilley, is eager to begin experiencing the benefits of increased integration between the two vendors' software.

Fujitsu uses Siebel for CRM (customer relationship management) and Oracle for its financials and supply-chain management. It has built its own data hub to unify information from the two systems, but Lilley is impressed with Oracle's data hub technology and would prefer to use Oracle-built integration technology. She would like to see Oracle release such technology before it begins releasing Fusion application components, the first of which are due in 2007.

"We've made a significant investment in these two systems, so if they are going to be more aligned, that's to our good," Lilley said.

After Siebel, Oracle may finally be tapped out on its ability to pull off multibillion dollar deals without taking on significant debt: Oracle Chief Financial Officer Greg Maffei estimated that Siebel's effective purchase price of around US$4 billion, excluding Siebel's cash supply and including Oracle's expenses for the deal, is equal to about a year of cash flow for Oracle. Oracle is borrowing roughly US$3 billion to fund its Siebel buy.

Industry analyst Josh Greenbaum said Oracle has already bitten off enough for now. With Fusion, Oracle will essentially have to create a standards-based hub technology for its own applications suite, he said.

"It's going to be hard. It's a complicated task. I think Siebel just made it significantly more complex at a relatively late date," said Greenbaum, the principal of Enterprise Applications Consulting Inc.

"Ask Microsoft how hard it is," Greenbaum commented, referring to Microsoft's protracted and delayed development of a new applications suite, Microsoft Dynamics (formerly Project Green), to unify its own collection of acquired ERP (enterprise resource planning) applications.

One clear difference between Oracle's PeopleSoft acquisition and its Siebel deal is the sensitivity it has shown by quickly explaining its plans to users, both its own and those it is acquiring, said Fujitsu's Lilley. She serves as director of Oracle's U.K. user group. Even before the Siebel announcement went out, Oracle contacted its user groups to warn of a coming major announcement and to set aside time for post-announcement conference calls to discuss the implications, Lilley said.

"Oracle is focused so much now on user groups and getting the customer feedback," she said. "They do realize that happy customers are going to make this stand or fall."

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