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Oracle takeover spooks some Siebel users

Siebel customers fear that Oracle's acquisition of the company means they will be forced to migrate to Oracle applications.

Oracle?s planned takeover of Siebel Systems has sparked fears among the latter's customers that support will be dropped, that maintenance costs will increase and that they will be forced to adopt Oracle?s CRM products.

Siebel is the latest in a line of relentless acquisitions by Oracle, following the capture of PeopleSoft, and will enhance Oracle's existing collection of middleware applications.

Even before the Siebel takeover was announced Sept. 12, Oracle had embarked on a major overhaul of its product lines. Dubbed Project Fusion, the effort is meant to combine the best of functionality from the Oracle E-Business Suite, PeopleSoft Enterprise and the J.D. Edwards Enterprise One suites.

It is not yet clear whether the supplier intends to blend Siebel and its other acquired CRM (customer relationship management) products into one application, but some U.K. technology managers are worried.

Martyn Tinsley, the Siebel development and support manager at the Leeds City Council, said he is extremely concerned about losing support for his Siebel CRM systems.

"As a large customer of Oracle and Siebel we are concerned. The marketing material we have received is suggesting Siebel will be the primary application in Oracle's Fusion Suite," he said.

Siebel's own ignorance about the future of its CRM applications is causing concern among customers, Tinsley said. "At the moment we don't have enough information. We contacted Siebel, and they said they don't know what is going to happen yet. An issue we have is that Oracle ceases support for new products very quickly and Siebel supports old applications for a long time, so there is this difference in mentality of the two suppliers."

Tinsley was also concerned that potential staff losses would affect the level of support Leeds City Council receives.

Mark Pitcher, systems manager at the Rotherham Metropolitan Borough Council, acknowledged that he is also very concerned about the acquisition, which could force him to migrate to another supplier.

"At the moment we are using Siebel on an SQL Server database, so this could have major implications if Oracle starts trying to make us move to Oracle applications," Pitcher said.

Others are worried that their hefty investments in Siebel software will be pointless if Oracle re-engineers the technology or requires customers to migrate to Oracle platforms.

Jo Williams, head of information at the Tower Hamlets London Borough Council, said she believes the move spells disaster for loyal Siebel users.

"We have spent a lot of time and money installing Siebel, and we are not going to be happy if Oracle forces us to change applications," she said. "How quickly they force us to re-implement--or if Oracle buys up most of the other CRM vendors--remains to be seen."

Some industry experts said the takeover could lead to turbulence in the industry.

Sharon Mertz, an analyst at market researcher Gartner, warned of future instability within the CRM market.

"Buyer indecision or difficulty closing the deal may create volatility in the significant part of the market represented by PeopleSoft and Siebel, which hold 17.4 percent of the market share between them," she said in a statement. That figure is equal to the market share of the current leader, SAP, she noted.

"This environment could negatively impact the compound annual growth rate...of the CRM market by as much as two to three percentage points as Siebel and PeopleSoft customers either move to other vendors or wait for Oracle to deliver Fusion, its next-generation application suite and underlying technology stack," Mertz added.

But AMR Research said that Siebel customers will benefit from the acquisition because Oracle is expected to support Siebel for quite a while.

"It?s the latest in a string of acquisitions Oracle has made to grow its applications business. For Siebel and its customers, this acquisition offers a graceful exit strategy. Siebel founder and chairman Tom Siebel acknowledged that there has been a ?shift in market dynamics? with more customers opting for integrated application suites from Oracle and SAP rather than the best-of-breed systems that Siebel offers," the market researcher said.

"We expect Oracle to sell, support, and enhance the current Siebel products for many years, even as they work to incorporate Siebel?s functionality into the next-generation Fusion product line," AMR added. "Oracle has gained credibility by providing strong support and enhancements to its recently acquired PeopleSoft customers, which should reassure Siebel customers."

Karen Gomm of ZDNet UK reported from London.