As if the enterprise applications market weren't confusing and contentious enough, Forrester Research Inc. has
an idea to shake things up even more. In an open memo to Microsoft, analysts suggest the company make its own play for Siebel Systems Inc.
Ray Wang, senior analyst of enterprise applications with the Cambridge, Mass.-based research firm, admits that it would not necessarily be consistent with Microsoft's usual way of doing business.
"It would be something bold if Microsoft did do it," he said. "I think Microsoft should seriously consider this, but I'm not sure if it will happen. The issue is do they see themselves in enterprise applications space with the larger, global 2,000 companies."
Purchasing Siebel would immediately bring the San Mateo, Calif.-based company's industry-leading enterprise CRM into Microsoft's portfolio, along with Siebel's latest developments in analytics, customer data integration and component assembly. Not only that, but it would keep the technology and key personnel out of the hands of rival Oracle Corp., which made a $5.85 billion bid for Siebel in September. The sale, pending regulatory and shareholder approval, should go through early next year.
"It's a once-in-a-lifetime opportunity," Wang said. "Microsoft has a good product for the midmarket. Leaving all the intellectual capital that Siebel has -- not fighting for it and giving it to Oracle -- seems kind of strange."
Without Siebel's maintenance revenue stream, Oracle will have a harder time competing long term with Germany's SAP AG, the revenue leader in enterprise applications particularly in vertical markets, Wang said. Additionally, a combined Microsoft-Siebel would be able to offer its own challenge to SAP.
Siebel's large customer and partner base would also bolster Microsoft's .NET development network. It would be far better for Microsoft if enterprise partners like Accenture, Deloitte & Touche and Electronic Data Systems are investing in Microsoft technologies rather than gravitating toward Oracle's Fusion products, Wang said.
Siebel technology would also help Microsoft leverage its Office applications in large enterprise environments in an end-to-end suite. Oracle is more likely to move toward OpenOffice.org, according to Forrester.
While Microsoft is moving toward on-demand applications itself, Siebel's existing OnDemand product has seen success in both the small and midsized business (SMB) market and enterprise companies, Wang said. Siebel could help jump-start Microsoft's on-demand efforts. A combined Siebel and Microsoft would also offer SMBs a migration to its ERP applications. Siebel's SMB customers could quickly move to Microsoft's Dynamic ERP to extend order management and analytics capabilities on SQL Server's BI.
The move would also provide Microsoft with a direct sales channel with experience in the enterprise market.
Finally, the deal would also offer increased competition in the marketplace and greater options for customers.
"We're in a stage in the software industry where we need a good level of competition," Wang said. "We'll probably see seven $1 billion software companies emerge, like Lawson Software, and two mega vendors, like SAP and Oracle, in the mix. Can a company with $1 billion in revenue compete as effectively?"