In 2005, just a week after announcing its plans to acquire CRM giant Siebel Systems Inc., Oracle Corp. executives
took to the stage at the annual OpenWorld conference and pledged to continue to support and develop Siebel's successful Software as a Service (SaaS) offering Siebel OnDemand.
It was an easy decision. While Siebel was struggling in the competitive enterprise applications market, the OnDemand division was doing well. Competitors like Salesforce.com, RightNow and NetSuite had already proven the success of the SaaS model, and Oracle didn't have a SaaS CRM application of its own. Yet, in the year-plus since the acquisition, there has been relatively little news surrounding Oracle's Siebel OnDemand -- when compared to the flurry of activity, press releases and marketing that Siebel put out after first launching the product.
In the year and half after Siebel first announced OnDemand, it issued eight releases of the product and went on to acquire UpShot, an on-demand sales force automation tool, and Ineto, a hosted telephony firm. Siebel also spent plenty of time trumpeting customer wins and sparring with Salesforce.com. In contrast, since OpenWorld 2005, Oracle has issued one announcement about Siebel OnDemand version 10, in April.
Part of that may just be corporate style.
Style over substance?
"Oracle as a company doesn't issue as many releases over new customer wins or product announcements," said Rob Bois, analyst with Boston-based AMR Research. "But Siebel CRM OnDemand is still their only multi-tenant Software as a Service application. It's incumbent on them to publicize customer wins, given the nature of that market and how competitive it is -- particularly from a marketing standpoint." @30604
It's a notable difference from competitor Salesforce.com, which issues several press releases touting new functionality before every upgrade.
"It seemed like they were moving ahead with the product, but it's kind of funny with these guys right now," said Denis Pombriant, managing principal with Stoughton, Mass.-based Beagle Research. "It seems like we're reduced to watching for smoke signals."
Oracle has indeed been working on Siebel OnDemand, according to Rob Reid, group vice president for CRM On Demand. Larry Ellison, Oracle's CEO, has long been a proponent of on-demand computing, and the first order of business was transitioning the Siebel application from the data centers of IBM, an Oracle competitor, to Oracle's grid technology.
"What Larry really wanted us to do was get over on Oracle," Reid said. "He didn't want to push the solution until we are on the new technology."
In fact, Oracle issued release 12 of Siebel OnDemand in the late summer but didn't publicize it because it was still making the data center move, Reid said. The new data center is now up and running in Austin, and new customers will have their data stored there. Existing customers are still in the old Seibel centers and will begin transitioning to the Austin center next month.
Oracle switched the data centers because it has "the most highly reliable and performance-based system in the market," Reid said, noting that "some Software as a Service companies had some problems with availability." Salesforce.com went through some much-publicized downtime at the end of 2005, leaving some customers unable to access the service. That happened just as Salesforce.com was switching over to Mirrorforce, a massive investment in mirrored data centers in three North American locations. Reid insists Oracle will see no such problems.
"We know that we have to make this happen without a single hitch," he said. "It being a service, if your customers aren't happy, they can move on. We've gone through extensive planning for over a year, and we've been taking customers through what we'll do, how we'll do it and how the customer can test the environment."
The release schedule and switching data centers have not been the only hurdles for Siebel OnDemand post-acquisition. There is also the issue of naming conventions.
"Oracle is very liberal with the term on-demand," Bois said. "Siebel CRM OnDemand gets lost in that shuffle because the naming conventions are so convoluted. You can't tell what's ASP [application service provider] versus SaaS. From a buyer's perspective you can't tell the difference."
Oracle has a long history with on-demand software, providing IT infrastructure for its customers for a fee via the ASP model. In that model, each customer gets their own server. The primary difference in the SaaS model is that the tool is based on a multi-tenant architecture where multiple customers share a server and also the economies of scale. In addition to hosting services for other acquisitions like PeopleSoft, Oracle provides on-demand services for Siebel's premise-based application -- Oracle On Demand for Siebel CRM. The multi-tenant SaaS tool is called Siebel CRM OnDemand. Reid acknowledges the confusing nature of it all.
"One of the problems when you're acquiring multiple companies [is that] you have multiple naming conventions," he said. "But we're working on it, and the next version of Siebel OnDemand will be the biggest yet."
Larry Ellison's role in the market remains an interesting one as well. The CEO of Oracle and a member of the board, he invested in Salesforce.com when it was starting out and still owns a major stake in NetSuite, which is preparing for a public offering. The chance that he'd hold back Oracle's on-demand efforts to benefit NetSuite is remote, however, according to Pombriant.
"No, he's got a fiduciary responsibility to optimize return for Oracle shareholders, regardless of his personal investments," Pombriant said. "There's plenty of room in the marketplace for an on-demand product like NetSuite that offers the ERP back end, as well as RightNow and whoever else is out there."