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Turmoil in the CRM Marketplace!

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It's hard to believe it has been just a few weeks since Oracle announced its $5.85 billion buyout of Siebel, the "best of breed" CRM vendor. I like to wait a little while before I comment on something new; it gives me a chance to work out the new jokes first!

Look for this acquisition to go through smoothly, without objections from either Siebel or its shareholders, in early 2006.

So what does this mean for Siebel, Oracle, and more importantly, JD Edwards customers?

Siebel wasn't doing well as an independent software vendor (ISV). The company was competing against Salesforce.com, with its online Web-based solution, and SAP, with its CRM solution being part of an overall ERP solution. So in the short-term, this is good news for Siebel customers, as they are now housed within Oracle's suite of solutions. Long-term, I'm sure that Siebel customers will be pressured (excuse me, "given the opportunity") to convert to Oracle's new Fusion applications.

For Oracle, this acquisition has been rumored for months, and it is good to see it happen. Now, Larry can stop his buying spree (PeopleSoft/JD Edwards, Retek, Siebel, and probably 10 other smaller companies in the last year) and focus on producing an integrated solution to compete with SAP. Larry now has an opportunity to sell an ERP solution to Siebel customers. Look for SAP to counter with a Siebel-to-SAP conversion program for Siebel customers who already use SAP apps as well as another marketing program for Siebel customers who don't already use SAP. If there are any third-party Siebel maintenance firms out there, let me know. I'd like to buy a piece and wait a few weeks for SAP to buy them out.

Oracle's share of the CRM market is now estimated by AMR Research to be $1.7 billion, or 15% of the total $11.5 billion annual CRM market. Coincidentally, this puts Oracle in a tie with SAP, which also has 15% of the market.

Of course, the fact that Oracle now has five separate CRM solutions is a bit of a problem. It has its own solution, included with its E-Business application suite. Then it has PeopleSoft's solution, Vantive, which PeopleSoft acquired in late 1999. The JD Edwards CRM solution space is pretty messy--with both the Youcentric solution, which JDE acquired in 2001, and a new EnterpriseOne solution rolled out in version 8.11. JD Edwards (actually PeopleSoft) called this "embedding CRM into 8.11." Hmm...is that better or worse than native coding? Sounds like they inserted a CNN reporter into the software! Reality is that very few JD Edwards clients are using CRM. At JDEtips, our CRM articles are among the least downloaded topics, and that is a definite tip-off.

Good thing that Project Fusion is already underway! I hear that the basic Address Book design is done, and the designers are currently working on the accounting coding block design. If you believe that Oracle will come out with a complete set of Fusion applications by 2008, I've got a condo off the Gulf of Mexico to sell you.

There is no doubt in my mind that the Oracle CRM space will be an absolute mess for many years, which gives SAP, Salesforce.com, and even Microsoft a leg up. Microsoft? How did they get into the picture? Microsoft has a competent CRM offering (creatively named Microsoft CRM), and it will prove an excellent refuge in the coming storm. In fact, this opportunity is so good that, with the help of one of our software partners, Klee Associates will be selling Microsoft CRM to JD Edwards customers (with full integration to World and EnterpriseOne) within a matter of weeks.

For Siebel customers, the eventual CRM solution in Oracle's Fusion software will undoubtedly look and perform much like Siebel does today. That's a reflection of the maturity of Siebel's software compared to the immaturity of Oracle's other solutions (with the exception of PeopleSoft's Vantive). The big losers will be the Vantive users, who have a mature product as well but can't win the Fusion design wars in the face of Siebel. JD Edwards clients really don't have anything much to lose, as their CRM apps are probably the weakest of all.

Look for a wide-open CRM market in the coming 12 to18 months as Oracle's Siebel acquisition takes hold, as SAP reacts, and as everyone from Microsoft to Salesforce.com tries to take advantage. Who knows who the eventual winner will be--perhaps the customers will win as they figure out how to leverage their buying power in the CRM market.

Andy Klee is the President of Klee Associates, Inc. Established in 1998, after Andy's decade-long career with JD Edwards, Klee Associates publishes the JDEtips, SAPtips, and ORAtips journals, which are read by thousands of IT staff and key business users at over 600 JDE, SAP, and Oracle clients. Klee also runs successful consulting, training, permanent placement, and third-party maintenance practices. Learn more at www.ERPtips.com.



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