Siebel’s
Acquisition
by Oracle
Key Findings
Nirav Khandhedia, 12030242017
Siebel’s Acquisition by Oracle
Oracle, world’s leading Software maker, has followed organic and inorganic growth strategy ...
Siebel’s Acquisition by Oracle
Ellison. "The shift in market dynamics has occurred over the last three to four to five yea...
Siebel’s Acquisition by Oracle
the deal is completed. Oracle laid off nearly half of PeopleSoft's 11,000 employees shortly...
Siebel’s Acquisition by Oracle
During the third quarter of fiscal 2006, Oracle Management initiated plans to restructure c...
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Siebel Acquisition by Oracle - Nirav Khandhedia

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Siebel Acquisition by Oracle - Nirav Khandhedia

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Siebel Acquisition by Oracle - Nirav Khandhedia

  1. 1. Siebel’s Acquisition by Oracle Key Findings Nirav Khandhedia, 12030242017
  2. 2. Siebel’s Acquisition by Oracle Oracle, world’s leading Software maker, has followed organic and inorganic growth strategy in much balanced way and has been successful in reaping sweets fruits of both. On September 12, 2005 Oracle, the acquirer of Sun Inc. and swallower of PeopleSoft declared that it will acquire its rival Siebel Systems in a friendly deal worth $5.8 billion, marking the second major competitor the Oracle has followed Organic and inorganic growth strategies; it has been successful in most of them company has targeted since mid-2004. The mega-deal was intended as a "major beachhead" against archrival SAP, which is the world's largest businessapplications seller. Siebel specializes in Customer Relationship Management (CRM) software. Oracle said the Siebel acquisition will add 4,000 customers and 3.4 million CRM users. Larry Ellison, CEO - Oracle, said the deal was in part Oracle wanted to be world leader in Business Applications and beat its archrival SAP. Oracle had its own CRM and People Soft too, but Siebel was major rival in this area. fuelled by requests from partners and customers, such as General Electric, that wanted to hold a single company accountable for their applications and also ease the integration process. Oracle struck the deal with offer of $10.66 for each share of Siebel stock, a nearly 17 percent premium over the company's $9.13 closing price Friday. The acquisition comes less than a year after Oracle managed to culminate a hostile takeover of rival PeopleSoft Corp. for $10.3 billion after a contentious battle that dragged on for nearly 18 months. With good acquisition process laid down, Oracle was able to completely integrate PeopleSoft in January. In April, the company purchased retail software maker Retek for just under $500 million. In early July, Oracle bought pricing specialist ProfitLogic for an undisclosed sum. And in August, Oracle took a $650 million stake in Indian banking software maker I-flex Solutions. Siebel had been struggling financially in recent years, as it has become clear that customers Siebel was suffering from financial crisis as customers were being more inclined towards integrated solutions rather than just a specialized application. Additionally, talks on possible acquisition by Oracle had halted decisions of many customers are switching to companies that can offer a soup-to-nuts integrated suite, rather than a specialized application, said Tom Siebel, founder and chairman of Siebel and a former Oracle executive under Siebel Acquisition by Oracle – VAM – Ex MBA – 2012-15 – Symbiosis Centre for Information Technology 2
  3. 3. Siebel’s Acquisition by Oracle Ellison. "The shift in market dynamics has occurred over the last three to four to five years," Siebel said. "A couple years ago, customers wanted best of breed in a couple of categories, but now customers and partners are indicating they are really looking for a suite of applications to control their costs going forward." Oracle CEO Larry Ellison claimed in a Siebel could see a future with Oracle, wherein CRM and BI of Siebel will be well integrated with wide product suite of Oracle and hence was ready to be acquired statement that his company "is now the undisputed leader in customer relationship management software. Oracle’s focus on modern, standardsbased applications and middleware is moving us into a leadership position in applications and on-demand services. Siebel accelerates that move." William Wall, a spokesman for SAP AG, said the acquisition won't cause SAP to change its strategy, but rather thinks it could benefit from the confusion the acquisition will cause both inside Oracle and in the marketplace. "We always anticipated that in order for Oracle to try to catch Through $5.8 billion deal, Oracle acquired Siebel Inc. and also the 4,000 customers and 3.4 Million CRM Users. up with SAP they would take this step." Mr. Wall said. "We have the benefit of several years and we intend to leverage that." Another company affected by the deal is Salesforce.com, whose chief executive, Marc Benioff, was a longtime protégé of Mr. Ellison. Salesforce has grown considerably by providing customer relations management software through a subscription service rather than a discreet product, a strategy that many large customers have come to prefer. Siebel has in recent years begun moving toward a similar model, and analysts say Oracle is clearly trying to move in that direction with this With Siebel acquisition, Oracle became world class leader in CRM and also entered into Subscription based CRM Services market to beat SalesForce. Siebel got its life back under hoods of Oracle. merger. Nearly 99 percent of Siebel stock holders voted in favour of a merger with Oracle. Siebel has about 5,000 employees located in the company's San Mateo, Calif., headquarters and throughout the world. While Mr. Ellison said the company will retain Siebel's specialized sales force, an unspecified number of Siebel employees will likely be laid off as soon as Siebel Acquisition by Oracle – VAM – Ex MBA – 2012-15 – Symbiosis Centre for Information Technology 3
  4. 4. Siebel’s Acquisition by Oracle the deal is completed. Oracle laid off nearly half of PeopleSoft's 11,000 employees shortly after that 4 merger was complete. Mr. Ellison has ensured Mr. Siebel would stay on with Oracle for a few years without giving details about what his role would be. When Oracle said, Siebel will be the “centrepiece”, analysts and customers had experienced a sense of worry. "They need to have some serious discussions and work out what will be the strategic product going forward. If you follow the logic that Siebel CRM is the 'centerpiece' of Oracle CRM going forward, that means Oracle and PeopleSoft CRM take a back seat. That means the data model, relative to Oracle CRM, takes a back seat and Having completed acquisition, Oracle laid off considerable portion of Siebel PreMerger employee base retaining key product developers and sales team. the Customer Data Hub takes a back seat." said John Radcliffe, research vice president with Stamford, Conn. - based Gartner Inc. Consequently, customers about to embark on a Customer Data Hub project held off their decisions on any implementations until they had a clearer signal from Oracle or Siebel on the future of the product. Post acquisition, Oracle had to decide on which data hub to tie together the PeopleSoft, J.D. Edwards, Siebel and Oracle applications within Fusion Middleware. Additionally, data quality and data integration tools, like extract transform and load technology, being vital to successful CRM projects, and Oracle had to make some choices about partnerships and development. Siebel has been an [OEM] partner of Informatica, but Oracle has a competitive tool in Oracle Warehouse Builder. Oracle needs to determine whether it will partner with Informatica or go internal. In terms of functionality, Informatica is broader and deeper, though Oracle is making good strides with Warehouse Builder. With Siebel acquisition, "The new race Oracle and SAP are engaged in is about who can bring to market faster 'business services' for both the midmarket and large enterprises -- i.e., application components/services based on the 'open' service-oriented architecture," Zornes wrote in an alert issued after Oracle broke the news of the acquisition. "At the end of the day, the upcoming vendor battle is about who owns the customer record, given that everyone is moving to SOA and Web services/components based on open source." Oracle continued product support for Siebel's CRM technology for a number of years. Oracle declared that it will use the company as a "centerpiece" in those efforts. Siebel Acquisition by Oracle – VAM – Ex MBA – 2012-15 – Symbiosis Centre for Information Technology
  5. 5. Siebel’s Acquisition by Oracle During the third quarter of fiscal 2006, Oracle Management initiated plans to restructure certain operations of pre-merger Siebel Systems, Inc. to eliminate redundant costs resulting from the acquisition of Siebel and improve efficiencies in operations. The total estimated restructuring costs associated with exiting activities of Siebel were $577 million. Oracle’s Siebel acquisition was thus beneficial for both the giants. Oracle could achieve its long seen dream of being number one in CRM industry. It could thus improve its stand among Business Application Makers. This has been a direct threat to SAP. With Siebel, Oracle has also been able to enter into Subscription based CRM Services market and ruled out the threat from SalesForce. Siebel Acquisition by Oracle – VAM – Ex MBA – 2012-15 – Symbiosis Centre for Information Technology 5

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