Industry watchers warn that Oracle’s voracious ways may leave the
software giant unfocused and ultimately may push some users to hook up
with smaller, unencumbered, competitors.
There is, analysts say, such a thing as too big, too fast.
”I think this could hurt [Oracle],” says Janet White, a research
analyst with London, Ontario-based Info-Tech Research Group. ”I think
they’ve made some strategic acquisitions. But they’ve got so many large,
unintegrated systems that they have to maintain with their huge installed
base that they’re not going to have a lot of time to integrate those
systems or come up with new products.
”And because they’ve purchased so many systems recently, it hasn’t been
really clear where their product roadmap is going,” White adds. ”That
makes buyers wary. They want to wait and see where they’re going. Oracle
has taken itself off a lot of short lists for potential buyers.”
The announcement came Monday that Oracle is acquiring Customer
Relationship Management software maker Siebel Systems in a $5.85 billion
cash and stock deal. Larry Ellison, CEO or Oracle, said the merger is
designed to make Oracle ”the number one CRM applications company in the
The deal comes after Siebel struggled financially for months, failing to
meet analyst projections for more than a year. So for some Siebel customers, this move may come as a relief, according
to Rob Bois, research director for customer management strategies at
Boston-based AMR Research.
”As a customer of Siebel, I’d be less nervous now because the future of
the company has been uncertain over the last few quarters,” says Bois.
”We talked to a number of Siebel customers who hadn’t been willing to
invest further in them with their lack of clarity and financial
stability. Now they have a large, very stable company that will own their
product. They know that several years down the road they have to move
over to Oracle or stay with something that is unsupported, but that is
several years down the road.”
Oracle’s Voracious Appetite
However, when it comes to Oracle — it’s business and its customers —
industry analysts wonder if all of these acquisition moves can really be
that healthy. When does voracious business consumption become gluttony?
When you’re talking about Oracle’s buyout of Siebel, keep in mind,
analysts say, that this isn’t the only acquisition that has been on
Oracle’s plate lately. Just this past January, Oracle closed the deal on
its acquisition of PeopleSoft. Before that, Ellison outbid SAP for Retek
Inc. And mix in with all of this, the fact that Oracle has gobbled up a
smattering of smaller companies.
”I don’t want to guess how many companies they’ve purchased recently,
but there’s a lot,” says White.
All of these purchases, adds White, means that Oracle has more systems to
integrate, more personnel issues and layoffs to oversee and less time to
focus on creating a straightforward product roadmap. And that may leave
customers feeling jittery.
”Oracle has its fingers in so many pies right now,” says White.
”Customers don’t know where things are going. They’re locked into a
technology that is very expensive and they can’t easily get out of. To
implement a CRM system like Siebel can cost hundreds of thousands if not
millions of dollars. It’s a very expensive technology to leave, and now
they’re not sure where their product roadmap is going. You have to wander
what’s going to happen to them in five or 10 years.”
A Good Deal for Customers?
Jonathan Eunice, founder and principal analyst at Nashua, N.H.-based
Illuminata, says it makes great business sense for Oracle to buy Siebel,
but it may not be as good a deal for the company’s customers.
”It’s actually a pretty smart move economically, because the cost of
developing in an entrenched market something that’s good enough to sway
people who have an entrenched solution takes a lot of time and a lot of
money. This way it’s a lot faster to accomplish,” says Eunice. ”The
problem from the customer side is that what’s good for Oracle is not
necessarily good for the customer… They have become voracious and have
moved into an aggressive acquisition mode…. For instance, they’re
laying off a substantial number of people at PeopleSoft, and as a result,
the lines of communication between the PeopleSoft technicians and the
channels are very disrupted these days. It isn’t necessarily as pleasant
for the customer as it is for Oracle.”
Eunice also says Oracle executives seem to be taking on a new attitude,
and it’s one that’s not so warm and fuzzy if you’re a customer.
”I think the question is whether Oracle will be as focused on the
customer as the customer would like,” he adds. ”I don’t think it’s
strictly because of the acquisition activity. It has as much to do with
the attitude of the acquirer. If the acquirer has the mentality of ‘we
bought your system, therefore we bought you’… If it’s a ‘we own you’
mentality — and that’s not unexpected — that’s not an attitude that
says, ‘we’re going to develop a lot of good stuff for you and we’re going
to do it with you on board’. That’s as important to the customer outcome
as how much time they spend on integration activities.”