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Reading the Oracle and Siebel Tea Leaves

Oracle could leverage its acquired analytic and performance management capabilities to become a formidable business intelligence power

• By Stephen Swoyer
• October 5, 2005

It’s going to take a while for the dust to settle and for the long-term import of Oracle Corp.’s acquisition of Siebel Systems Inc. to become clear.

Oracle’s move is certain to impact an already reeling enterprise applications space, where the Redwood Shores, CA-based database giant and SAP AG are easily the two brawniest players. That much is a no-brainer.

But because of Oracle’s business intelligence (BI) chops and Siebel’s own aspirations in the BI space, not to mention the latter company’s partnerships with several prominent BI players, Oracle’s Siebel gambit has the potential to be a hugely disruptive BI event. Siebel’s analytic capabilities will augment Oracle’s own homegrown BI capabilities, for starters, and Siebel’s customer-centric analytics should complement the industry-specific analytics Oracle acquired from the former PeopleSoft Inc. What Oracle does with all of these capabilities—whether it’s gestalt or ge-bust, so to speak—is another matter entirely.

BI players, many of which compete with Oracle in key markets, are putting on a brave face. Take NCR Corp.’s Teradata division, which often smacks up against Mr. Ellison and Co. in the large data warehousing space. Teradata also has a long-standing relationship with Siebel, however, such that the latter company has produced a version of its Business Analytics suite that’s been optimized for Teradata’s flagship Warehouse product.

To the extent that such an arrangement results in cross-selling opportunities for both companies, and to the degree that Siebel’s CRM application stack (if not its Business Analytics suite) is more pervasive than Teradata Warehouse, Teradata might be said to have a more significant cross-selling opportunity than Siebel. As a result, Oracle’s move probably didn’t make the folks in Dayton (NCR’s corporate headquarters) very happy. But Rick Volz, senior global alliance manager for Teradata, offered a philosophical take on the acquisition.

“It probably wouldn’t be right to say Oracle’s not competitive with Teradata in any way. We obviously compete for a certain slice of the market. But at the same time, in a world of coopetition, things happen, and you figure out ways to cooperate and provide more opportunities as a result of that,” says Volz.

Volz offered an optimistic take on Oracle’s move, suggesting that it could lead to a blossoming relationship between Teradata and the database giant—much like that which exists between Teradata and Oracle arch-competitor, SAP. “I think there’s a strong possibility there’ll be additional opportunities for that [partnership],” he concludes, citing the existence of combined Teradata and Siebel customers and Oracle’s pledge to do right by the latter company’s users.

Another BI competitor that could be impacted by Oracle’s move is Hyperion Solutions Corp., which has clashed on several occasions with Mr. Ellison and Co. on the issue of OLAP performance bragging rights. The addition of Siebel’s and PeopleSoft’s analytic technology could make Oracle a bona-fide behemoth in the customer analytics space. And with the acquisitions of the former Retek and ProfitLogic, Oracle has beefed up its retail analytic chops, too. To the extent that Hyperion is a player in these and other markets, there’s plenty of room for potential fractiousness; but given the mainstreaming of performance management, and in light of PeopleSoft’s own enterprise performance management (EPM) capabilities and the performance management expertise that Retek and ProfitLogic bring to the table, too, it’s possible that Hyperion and Oracle might be seeing a lot more of each other.

Company officials downplay the threat, however, with Hyperion vice-president of corporate communications Bob Schettino invoking that old acquisition bugaboo—“integration difficulty”—to dismiss Oracle’s chances. “Hyperion rarely sees Siebel in sales deals. And it looks as though Oracle will have their hands full integrating their recent acquisitions,” Schettino says.

Like Teradata’s Volz, Schettino knows a thing or two about making a silk purse out of a sow’s ear. He says Oracle’s Siebel gambit isn’t enough to close the gap between itself and Hyperion, which—now that you mention it—will release its next-gen Hyperion 9 BI suite in a couple of weeks. “We're focused on what customers are really asking for and what we are delivering with Hyperion System 9—integration of financial management applications and BI, that neither Siebel nor Oracle can match,” Schettino concludes.

Another Siebel skeptic is SAS Institute Inc., whose charismatic CEO, Dr. Jim Goodnight, has in the past likened Siebel to a high-priced “rolodex.” In a press release issued shortly after news of the deal became public, Goodnight reiterated this comparison. Nevertheless, says Christina McKeon, a manager of technology marketing for Goodnight’s concern, SAS and Oracle don’t really compete against one another.

“I would say it’s still [a relationship] that’s more complementary than it actually is competitive. We really don’t come in the presence of Oracle. It’s usually when our customers are coming to us, asking us to help them get their data out of Oracle, so customers who are using it as ERP, and they come to us and say, ‘We’ve got all this data in Oracle and we want to be able to use the right tools and platform to get it out,’” she says.

Oracle has been making more noise in the BI space—the database giant’s next-gen ETL product, code-named Paris, should comprise an Enterprise ETL product that’s on par with SAS’ own market-leading ETL offering—but McKeon says SAS doesn’t really see Oracle as a threat. “Oracle is more of a business intelligence influencer than a [BI] competitor,” she argues.

SAS does market CRM technology, however, and—McKeon concedes—does compete against Siebel; particularly in the customer-focused analytics segment. But SAS, too, saw an opportunity to turn the sow’s ear into a silk purse—in this case, by comparing Siebel’s analytic capabilities (the “rolodex” of Goodnight’s quip) with what McKeon claims are SAS’ far more formidable analytic chops. “What we found is that [Siebel] was really limited in terms of its business BI functionality, so it couldn’t compete with some of the pure-play vendors like SAS and Cognos and Business Objects,” she argues. “It really was only meant for [Siebel’s] installed base, so if you wanted to pull data out of Siebel, it could pull data out of Siebel, but you couldn’t do advanced analysis with it.”