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Phillips closes Siebel's last picture show

Oracle's president, hoping to entice Siebel customers to stick around post merger, laid out the "end game" of Project Fusion.

After a multiyear run, Siebel Systems on Wednesday closed what is expected to be its last CustomerWorld show, with the keynote address presented by an old archrival.

Oracle president Chuck Phillips, seeking to quell any uneasiness in the audience over his company's pending acquisition of Siebel, outlined both its plans after the merger and its "end game" with Project Fusion. But will Siebel's customers stick around for Act II?

Phillips and Oracle are banking on it. If they achieve the larger customer base and revenues they desire, Project Fusion should lead to greater profit margins.

"It's all about scale. The more customers you have, the lower your costs," Phillips said, addressing the rationale for the merger. "In the software industry, scale matters."

To retain Siebel's customers, Phillips laid out the balancing act that Oracle is prepared to undertake. Several weeks ago, Oracle announced plans to offer lifetime support for customers who do not want to migrate to its latest offerings.

Oracle, however, hopes customers eventually find a reason to migrate to its Project Fusion products, thus lowering the software maker's operating costs. Project Fusion seeks to take the best features and processes that Oracle has acquired through acquisitions, such as PeopleSoft, and meld them into a new generation of standards-based Java offerings.

The so-called end game for Siebel customers who migrate to Oracle's Fusion applications, once the major components roll out in 2007, will be several-fold, Phillips said.

"You can monitor transactions in real time and make better decisions," he said. "And if you need to make modifications on the fly, you can do that."

Standards have slowly crept into the layers of the technology stack, from the database to middleware, but applications are the last frontier, Phillips said. Proprietary software runs rampant in the applications area, he noted.

"We think the applications layer is the last area of the (technology) stack that is ready for standards," Phillips said.

And early next year, when the Siebel merger closes, Oracle will learn if Siebel customers are ready too.