Oracle - Seibel Union Changes the CRM Game and Opens Door for Salesforce.com

You've got to give credit to Oracle CEO Larry Ellison. The guy's timing was exquisite.

He didn't wait for his own company's OpenWorld conference to start on Sept. 17 to announce Oracle's $5.85 billion acquisition of Siebel. Nope. Larry dropped the bomb just as Microsoft's Professional Developer's Conference was getting under way --- this week --- in Los Angeles. Adding insult to injury, as the PDC was starting up, Los Angeles was plunged into darkness as electrical workers apparently cut a wrong line. Perhaps they're on the Oracle payroll, too.

Though the timing of the Seibel announcement can be ascribed to Ellison's penchant for tweaking Bill Gates' nose, it's certainly not what solutions integrators have on their mind. The concerns --- not fear, but a healthy concern --- is what Oracle is trying to be and what it will mean for the future of customer relationship management. Good question.

Certainly, the Oracle of today (and tomorrow, pending regulatory and stockholder approvals of the Seibel acquisition) is very different from what it was just a couple of years ago. With its prior acquisitions of PeopleSoft (and JD Edwards, which PeopleSoft had previously acquired), Oblix, TimesTen, and some others, it's clear that Oracle wants to muscle SAP aside and become the leading supplier of business applications and services, most notably CRM.

Channel issues aside, one has to wonder what an Oracle-Seibel union means for the future of CRM applications.

The Seibel model has been one that followed the traditional path for applications. The customer buys (licenses, actually) a series of comprehensive, complex products that require often sweeping customization to integrate with existing systems. But that's changing.

Look no further than Salesforce.com. Started by 13-year Oracle veteran Marc Benioff, Salesforce.com is an on-demand CRM solution that replaces traditional enterprise software technology. It's a hosted subscription service. The customer installs nothing.

It must be working. The company continues to report growing profits and new customers. For 2006, it expects revenue to jump by up to 80 percent, reaching the $300 million plateau. And it now boasts more than 300,000 subscribers.

For a hosted environment that would seem to shut out any business opportunity for solutions integrators, Benioff seems to have an answer. At its own "Dreamforce" conference earlier this week, the company unveiled AppExchange, a platform where ISVs can market their own services-oriented applications.

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