Article

Siebel buy further complicates Fusion plans

Mark Brunelli, News Director

Oracle's Project Fusion initiative got a whole lot more complicated this week when the company announced it would purchase CRM giant Siebel Systems Inc. for $5.85 billion, but experts say it remains a workable -- if somewhat confusing -- plan.

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The challenge for Fusion is that [Oracle now has] to in effect maintain three major product lines somewhat separately for an extended period of time.
William Band,
consulting analyst, enterprise applicationsForrester Research Inc.

Fusion, Oracle's ambitious plan to consolidate into one platform all of the technology it acquired in takeovers of J.D. Edwards, PeopleSoft Inc. and several smaller companies, has already been dubbed "Project Confusion" by doubters. With the addition of Siebel, enterprise applications experts said that nickname isn't likely to go away soon.

But while Fusion is a monumental undertaking that baffles many, experts said the initiative should be successful if Oracle continues to take a gradual approach -- careful not to alienate newly acquired or existing customers with sudden and sweeping product changes.

"There is some skittishness mainly because it's still not really clear what exactly Fusion is and what it means to [Oracle's] clients," said Scott Nelson, managing vice president with Stamford, Conn.-based Gartner Inc. "At the same time, we're hearing from clients that they like that Oracle seems to want to step up and have a more comprehensive roadmap. I think the feeling is going to be that Siebel will just make that a bit more complex."

How Siebel fits into Fusion

Oracle's gradual approach to Fusion means that its new Siebel customers probably won't see major Fusion-related changes to their software investments for a very long time, Nelson said. It also means Fusion itself could take longer than expected to reach completion.

When Fusion is finally completed, analysts confidently predict that Siebel software will make up the centerpiece of Oracle's CRM offering.

Nelson explained that Oracle never had a very strong CRM application of its own, but with the addition of Siebel, the company is getting a best-of-class sales automation system, a best-of-class call center, stronger marketing software and enhanced analytics capabilities.

"It definitely makes them stronger in the actual applications suite that they sell," Nelson said. "With the existing products that they already have, it makes them, according to our numbers, the leader in CRM market share out there."

The other major component that Siebel brings to Fusion is a world-class application development team that, given additional resources, could ultimately improve the design and development of other software products in the portfolio, Nelson said.

More on the Siebel buy:

Siebel deal leaves CRM users wondering

Experts mull over Oracle's Siebel buy

The fine line between consolidation and alienation

The belief that Siebel software will likely provide the lead CRM functionality within Fusion may not sit well with some PeopleSoft customers.

"Customers who are being supported and who felt pretty good that they were going to be on the PeopleSoft platform now are finding that 'actually we're going to have to become a Siebel customer if we want to remain in the Oracle family,'" Nelson said.

That example of customer uncertainty pretty much sums up the type of management challenges experts said Oracle is likely to face as it makes tough decisions about what software to include in Fusion and what to eliminate. It also explains why they think Oracle is wise to proceed cautiously with Fusion plans.

"Oracle is going to have to do the basic task of making sure everybody is happy with the kind of choices that they provide," said Joshua Greenbaum, principal analyst with Enterprise Applications Consulting in Berkeley, Calif. "It's very doable. It's just something that takes hard work."

If Oracle moves too fast with consolidation plans, it risks alienating valuable new Siebel customers, explained William Band, a consulting analyst with Cambridge, Mass.-based Forrester Research Inc.'s enterprise applications group.

"Oracle originally announced that they would phase products out very quickly, but they got a lot of resistance from the customers," Band said. "The challenge for Fusion is that [Oracle now has] to in effect maintain three major product lines somewhat separately for an extended period of time."

The analyst, who predicts that Fusion won't be completed for three to five years, said he believes Siebel's customer base was a primary motivator for the acquisition.

"Therefore, Oracle would be foolish if they're not doing everything they can to secure that customer base, support it [and] support the current Siebel products for a significant length of time," he said.

Clearing up the confusion

With all the confusion around Fusion, analysts said Oracle can further mitigate the risk of alienating customers by doing a better job of explaining just what the initiative entails.

"Whenever firms are trying to convince clients to stay with them based on future advances that they're planning to make, they owe it to those clients to communicate as clearly and as often as they can," said Gartner's Nelson. "Oracle needs to sort of lay it out so clients understand 'you're not just buying what we're saying today, you're really buying where we're going.'"


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