Saluting the Siebel supernova

Very few software companies ever top a billion dollars in annual revenue; even fewer do so within 10 years of their founding and by pioneering a totally new product category. Siebel Systems, however, which recently agreed to be acquired by Oracle, did just that -- and more.

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It’s easy to take potshots at Siebel. I’ve heard customers call it “the $10 million Rolodex” and refer to it as a legacy system. But let’s take this moment to salute Siebel’s main accomplishment: It blasted off like a rocket during the Internet boom, evangelizing a technology that wasn’t remotely based on the Net. Siebel fed on and helped fuel corporate America’s sudden enthusiasm -- perhaps rekindled by the Web -- for connecting more closely with its customers.

The analyst postmortems on this deal are just now coming in, and they all seem to agree that getting Siebel will be a big win for Oracle. Not only will Oracle obtain more customers and maintenance revenue, it will also inherit the crown jewel of packaged CRM products, which will help counterbalance SAP’s growing strength in this area.

Gartner analysts Michael Maoz and Lee Geishecker write that Siebel’s capitulation indicates the CRM market has split into two segments: IT buyers who want CRM only as part of a broader architectural stack on one side, and business buyers who want a lighter-weight or more vertical-market-oriented solution on the other. “Customers will find it difficult to justify the decision to buy deeper stand-alone CRM suites,” their report says. The acquisition also raises the red flag for customers running Siebel on Microsoft or IBM platforms, given Oracle’s competition with those two companies.

Forrester Research analyst Paul Hamerman writes that the acquisition may add to the uncertainty surrounding Oracle’s Project Fusion. He says that Oracle’s plan to migrate existing CRM customers to this new platform by the end of the decade “will prove very challenging.”

Finally, an AMR Research staff report wonders what will happen to joint SAP-Siebel customers, noting that “SAP has been wooing its installed base to move onto mySAP CRM. For holdouts that have stuck with Siebel, this may be the catalyst to make the leap.”

However the competitive landscape evolves, I’ve got to believe that this acquisition is good for innovation in CRM solutions. With one less participant, it seems more likely that the next Tom or Tammy Siebel is out there revving up a business plan and code base. Look forward to seeing what they can do!