September 12, 2005

Oracle has finally agreed to acquire CRM (customer relationship management) vendor Siebel for $5.85 billion in cash.

This is Oracle's biggest acquisition since it bought PeopleSoft at the end of 2004, and it signals the end of one era (and, naturally, the beginning of another) in CRM. Siebel had ruled the market all throughout the 1990s, although in recent quarters it had surrendered market share to Oracle archrival SAP and hosted CRM pioneer Salesforce.com.

As with the PeopleSoft deal and other acquisition activity of late, Oracle's strategy is to continue to win applications business, both as a way of complementing database sales and going after SAP, which Oracle CEO Larry Ellison has a passion for surpassing.

SAP's enterprise applications leadership was the context in which Ellison stated "Oracle becomes the number one CRM applications company in the world. Siebel's 4,000 applications customers and 3,400,000 CRM users strengthen our number one position in applications in North America and move us closer to the number one position in applications globally."

SAP has made noises about debuting a hosted CRM solution, partially in response to the popularity of Salesforce.com. That could be one area in which Walldorf makes a countermove against Oracle. No doubt, SAP is also hoping that Oracle will face a significant integration challenge with Siebel, with PeopleSoft and Project Fusion still on Oracle's plate.

We will update this story as further responses and analyses come in.

Source: Line 56