Oracle Takes Shots At Siebel
By James E. Gaskin, Inter@ctive Week
September 18, 2000
Make no mistake. Oracle is taking dead aim at Siebel Systems in the coveted customer relationship management market. "There's no reason for someone to pay hundreds of thousands of dollars for Siebel when you can get Oracle Sales Online free," says Jesper Anderson, Oracle's vice president of CRM Online Services. "This software should be free, just like e-mail systems."
Oracle declared open war on the company founded and led by Tom Siebel last month, when it announced its OracleSalesOnline.com initiative. The database giant is offering its CRM software for free, hoping instead to pull in revenue on the service side, through such offerings as integration, forecasting and sales compensation.
While Oracle says it's the smart way to make money in the CRM business, industry watchers say the move has a hint of desperation to it. Siebel is the clear market leader, and Oracle may fear it is in danger of losing the race.
"Oracle has never been shy," says Sharon Ward, director of enterprise business applications at the Hurwitz Group. "Siebel is the gorilla in this market, and Oracle is using this as an absolute shot at Siebel, no question."
There's little question as to why Oracle wants to improve its standing. AMR Research predicts the CRM market will mushroom from a healthy $4.4 billion in 1999 to $20.8 billion by 2004, a roughly 36 percent compound annual growth rate. Depending on how you slice the market for e-sales, e-marketing and e-service products, Siebel gets credit for about 70 percent of each.
Oracle's move could cut into that market dominance, but for now Siebel says it isn't worried.
"We weren't surprised Oracle did it," says Richard Gorman, vice president of product marketing at Siebel, "and we weren't surprised there was no impact on our business."
Siebel fans whisper that Oracle (www.oracle.com) couldn't sell its CRM software, so it started giving it away. Gorman politely sidesteps that evaluation, but says: "Oracle has been making promises for three or four years, and this is their fourth try at e-sales software. They've been unsuccessful in the last three tries, and we'll watch and see if this attempt is successful."
A competitive company such as Siebel (www.siebel.com) doesn't give an inch when customers are on the line, but Ward believes Oracle has more than a small chance of success this time.
"This is a brilliant marketing strategy," Ward says. "Sales force automation and contact management is inherently sticky. Millions of salespeople are using excellent products that don't fit well anymore because of the pain of moving."
Anderson believes the ease-of-use of OracleSales Online.com will make a big difference of customers. "Siebel's product license price is just the tip of the iceberg, not including consulting, maintenance and so on," Anderson says. "We challenge Tom Siebel to match our ease of use and setup. He can't do this, because his client-server architecture is old-fashioned."
Gorman doesn't bristle at Oracle statements. "We have seen no impact on our business by any of our competitors, including Oracle," he says. "We track competitors every quarter, and Oracle never ranks higher than the third or fourth, following Clarify and Vantive. Three or four years ago, there were 200 players. Now the most significant players are us, followed by a big drop before reaching number two, three and four."
Ward says the CRM market will change drastically in the coming year. "I thought there was going to be a shakeout or convergence even before Oracle got in," Ward says. "There will be two or three clear leaders, then a second tier that will be healthy, but not as large as today."
CRM systems require considerable work before they're useful, including convincing all the sales people and sales management to trust the systems. Users must load information into a system and then they must rely on and use the system, or the information will go stale.
Perhaps paying several hundred thousand dollars for a system will encourage management to use it, and push all sales staff to funnel information through the appropriate software. But Oracle believes people will want to test the software before committing so much money. The best way to pull in more CRM tire kickers is to make the tires free.
"Siebel doesn't have a lot of weaknesses," Ward says. "But Oracle can go to a customer on the fence, and say, 'Why not try Oracle? Get contacts in easily and start using the system for free. Try before you buy.' "
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