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Tuesday, September 13, 2005

Some people are saying, I told you so

It's fun to look at people who made predictions and got them completely wrong.

It's instructive to look at people who made predictions and got them completely right.

Roger Strukhoff said this on April 12:

Although Oracle's Larry Ellison resolutely defends Oracle's strategy as centering around shareholder value and competitive advantage, there is always an undercurrent of personality and ego behind his company's moves. Ellison has never allowed key executives to amass too much power, his dismissal of influential and industry super-heavyweight Ray Lane a couple of years back being a prime example.


Former PeopleSoft CEO Craig Conway is also among a group of people who were high-level Oracle executives at one time. One source close to the recent PeopleSoft acquisition crisis expressed a belief that this battle was "quite personal, to quite a degree." This source also said that "Tom Siebel and Marc Benioff had better watch it," referring to two other high-profile ex-Oracle execs who went on to lead their own companies, Siebel Systems and salesforce.com, respectively.

Tom Siebel is out of the day-to-day loop at his eponymous software company. And it's interesting to note that he and Benioff can be assumed not to be golfing buddies, given their companies' head-to-head competition and that Benioff has had some rude things to say about Tom Siebel in the past. So they hardly represent a unifed front, or a personal affront to Larry Ellison in the way that Conway's aggressive leadership at PeopleSoft may have as the company increasingly impinged on what Oracle viewed as its core business.

That said, adding the established CRM capability of either of these two companies might be viewed as a key bit of strategy for Oracle, particularly as the acquisition of one would most likely weaken the prospects of the other. Payback is doubly sweet when it makes perfect business sense. One can only wonder whether this plays any role within the thought processes of Oracle's undisputed leader.


And Josey Puliyenthuruthe said this in June:

The feeding frenzy in the business software industry is nowhere near over. Already there are rumours floating in the global investment banking community of Oracle cosying up to Siebel, a San Mateo, California vendor of customer relationship software.

Siebel has had more than its share of troubles with three CEOs passing through its swivel doors in the last year and its business looking shakier than ever before.

Further, its balance sheet makes for an ideal target: zero debt, $2.2 billion in cash and a $5 billion market cap. Siebel doesn't hold much value for SAP given that the German company has its own strong customer relationship practice.

But, for Oracle, Thomas Siebel's company could be a very valuable target given that it would add customer relationship management, another key horizontal functionality after human resource management acquired through PeopleSoft.

One restraint on Ellison, though, will be Oracle's ability to digest another large-sized acquisition on the heels of the PeopleSoft-JD Edwards buy.

That operational risk will also stop him from looking to gobble up other sizeable targets such as BEA or I2.


Well, this is as good a time as any to delve into the history (from Forbes):

There's something poetic about a rivalry between two people who were once teacher and student. That's the deal with Larry Ellison of Oracle and Tom Siebel of Siebel Systems. Siebel worked for Ellison as a top salesman at Oracle from 1984 to 1990 but left in a huff after Ellison rejected his ideas for sales force automation software, he claims. Siebel's eight-year-old company is now the clear leader in SFA and customer relationship management software, with $1.8 billion in sales last year. That's roughly one-fifth the size of 24-year-old Oracle, which is the underdog here but vows to overtake Siebel in a few years. They're fierce competitors, who have a lot in common. Both are control freaks full of hubris who seem to revel in openly insulting each other.

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