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The much-rumored Oracle play for Siebel has materialized with a September 12 agreement to acquire the large CRM specialist for $5.85 billion. Siebel was an attractive target for Oracle with its blue-chip enterprise customer base, leading CRM functionality, and a growing hosted subscription offering, Siebel OnDemand. Following its acquisitions of PeopleSoft, Retek, and i-flex, the Siebel deal increases the complexity of company and product integration efforts and its next-generation product line strategy known as Project Fusion. Oracle needs to make Siebel's CRM functionality an integral part of the next-generation product line that has been primarily based on the existing Oracle E-Business Suite. Existing Siebel customers should pay close attention to product release support schedules, maintenance costs, and enhancement road maps as Oracle assimilates another major applications acquisition.
Six months after concluding the PeopleSoft acquisition, some details are beginning to emerge around Oracle's next-generation applications and middleware strategy. While many issues remain undecided, it appears that Oracle is reaching out to the customers of the former Enterprise, Enterprise One, and Oracle E-Business Suite (EBS) and seeking additional input through one-on-one meetings and user groups. Current customers and prospects should take this unique opportunity to engage Oracle in discussions about Project Fusion and Oracle Fusion Middleware requirements, especially those that balance open systems, process-driven approaches, and best-of-breed strategies with Oracle's existing model.
With enterprise small and medium-size business (SMB) spending leading enterprise expenditure, winning the midmarket is a key component to Oracle's future growth. Since its acquisition of PeopleSoft, Oracle has been quietly making investments in new partnership programs, product development, and branding initiatives around the JD Edwards assets. These initiatives and investments show Oracle's intent to compete in the midmarket. With key partner successes in the past two quarters, Oracle is demonstrating that JD Edwards is still a viable contender.
CEO Larry Ellison announced Oracle's intent to counter-bid SAP to acquire retail apps vendor Retek. To better its chances in this offensive, Oracle offered $9 per share, for a total of $525 million in cash, in comparison with SAP's offer of $8.50 per share. Oracle had to make a bold move to defend its leadership in the apps market in North America and preempt SAP from migrating Retek's customer base away from the Oracle platform. Given the customer overlap and minimal product overlap, the idea of an Oracle-Retek merger made complete sense -- a few months ago.
Despite the overall maturity of financial management systems, these applications are on the forefront of business and IT priorities. With the emphasis on control and efficiency brought on by Sarbanes-Oxley (SOX), companies are consolidating, upgrading, and optimizing their financial management systems environment to improve financial reporting. In addition, there is strong uptake in financial management applications (FMA) subcategories of planning/budgeting, financial reporting, and internal controls evaluation and monitoring. The overall financial management applications market is currently $4.5 billion in product revenues and is growing at an annual rate of 5%.
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From The Editor
This quarter has seen a significant amount of consolidation activity within Enterprise Applications, including acquisitions of major players in multiple markets. Even as this First Look goes to press, more acquisitions are happening: HP's acquisition of service management vendor Peregrine and Oracle's acquisition of supply chain vendor GLOG have just been announced. Represented in this First Look are Quick Takes on some of the significant transactions of the quarter, with more research planned. Oracle's spending spree is particularly significant, as it has recently purchased PeopleSoft, Retek, and i-Flex and has now agreed on a $5.85 billion payment in order to acquire Siebel, the enterprise CRM market leader.
CRM continues to be a hot topic with our clients, and our coverage of the CRM marketplace is expanding with research reports detailing how to build a CRM business case and a series of CRM deployment best practice reports. In the works are additional CRM Waves, including on-premise CRM for SMB and Forrester's first Wave of CRM systems integrators. Stay tuned!
In addition to CRM, we are covering the changes in the financial management applications space as companies consolidate, upgrade, and optimize their offering due to Sarbanes-Oxley emphasis on control and efficiency. We are also proud to have published our first pieces of Enterprise Applications research leveraging data from Asia Pacific regarding procurement and sourcing and general supply chain purchasing intentions.
Look to us for ongoing coverage as these markets continue to consolidate and evolve.
Please feel free to send any comments to me at johnragsdale@forrester.com.
John Ragsdale
Vice President, Research Director
johnragsdale@forrester.com
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The Forrester Wave™: Enterprise CRM Suites, Q2 2005
Enterprise buyers understand that their CRM vendor selection decision has long-term consequences. However, vendor alternatives are becoming fewer, and buyers are not fully satisfied with the level of support from leading CRM providers in working collaboratively to achieve long-term business objectives. To help enterprises make the best choice, Forrester evaluated the strengths and weaknesses of the four top enterprise CRM suites vendors across 177 criteria.
The result: Siebel Systems continues to lead the pack. SAP is gaining ground in an attempt to overtake the leader. Oracle has made dramatic moves to improve its share of the CRM market through its recent acquisition of PeopleSoft. Amdocs is deepening its market position in the important communications services provider market. Buyers must make their decision with care. Selection of a CRM vendor is a marriage, not a date. To pick the best partner, this report includes an interactive comparison tool that provides detailed vendor evaluations and customizable rankings.
How To Select A CRM Software Vendor
Selecting CRM software means much more than evaluating feature/function lists. Forrester talked with 19 leading organizations and found that they use a balanced set of criteria: vendors' current offering, strategy, and market presence. Within these categories, ease of use, analytic capabilities, and sound customer data management are of prime importance. Buyers want a flexible application that will demonstrably improve user productivity and the customer experience. And not only do they value the vendors' product capabilities, but they also value the expertise of systems integration partners.
IBM Redefines Best-Of-Breed Data Management With DWL Acquisition
IBM's Software Group announced its intention to acquire customer data integration (CDI) vendor DWL on August 2. The Enterprise Master Data Solutions group at IBM has been on an acquisitions spree of late, and the acquisition of DWL fills a much-needed product hole in IBM's master data management (MDM) offering. Companies shopping for best-of-breed customer and product data management solutions can benefit immediately from this one-stop shop for these already integrated products. The MDM market is consolidating, and competitors will have to make similar acquisitions or be left far behind. Expect reciprocal transactions from vendors such as Experian, Oracle, and SAP over the next 12 months.
SSA Global Makes Bold Front-Office Play
SSA Global is an ERP vendor with a long-term goal of becoming a broadly focused tier one competitor to Oracle and SAP. With its 10th acquisition since 2001, the intellectual property from Epiphany will plug some of the basic product gaps in SSA's current CRM solution. If the multiple post-merger integration challenges are resolved successfully, existing SSA Global customers will benefit from Epiphany's best-of-breed CRM marketing, interaction center, sales functionality, and event-driven analytics. For existing Epiphany customers, the news is less positive, particularly within non-SSA verticals (communications, financial services, and insurance). Forrester expects market consolidation, with smaller CRM players positioned to be acquisition targets for larger midmarket ERP vendors such as Lawson-Intentia and Infor.
Asia Pacific Procurement And Sourcing Apps Outlook
As part of our first-ever survey of more than 700 Asia Pacific (APAC) businesses and government agencies, Forrester analyzed their investments in procurement and sourcing (P&S) solutions.
APAC Supply Chain Apps Spending Outlook
As part of its first-ever survey of more than 700 Asia Pacific businesses and government agencies, Forrester analyzed their investments in supply chain management (SCM) solutions.
Upcoming Enterprise Applications Forrester Teleconferences
ForrTels are live, interactive, hourlong teleconferences incorporating a simultaneous WebEx slide presentation by a Forrester analyst, followed by an open forum for questions and discussion.
Best Practices For The Service Desk -- People And Organization
September 23, 2005, 1-2 p.m. Eastern time
The Forrester Wave: On-Premise Sales Force Automation
September 27, 2005, 11 a.m.-12 p.m. Eastern time
Best Practices For CRM Deployment: Part 3 Of 3 -- Successful Customer Integration, Lessons From 22 Global Leaders
October 5, 2005, 11 a.m.-12 p.m. Eastern time
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