Posted by: Steve Hamm on October 27, 2005
During our internal BW discussions over the past few months about who would buy wounded Siebel Systems, I always considered Oracle the most likely acquirer—but saw Microsoft as a darkhorse. On Sept. 12, Oracle agreed to buy Siebel for $5.8 billion. Now analysts at Forrester Research have penned a public memo to Microsoft urging it to snatch Siebel out of Oracle’s clutches. My own memo to Microsoft: Don’t do it.
Forrester analyst R "Ray" Wang, the principal author of the memo, argues that Microsoft has a unique opportunity to change the dynamic in the enterprise applications market. He and his colleagues offer up nine key reasons why Microsoft should buy Siebel. Here they are, in brief: 1) Get industry-leading customer-relations management products and programmers. 2)Enlarge the network of corporations and developers focusing on its .Net software-development technologies. 3)Link Windows and Office to Siebel applications. 4)Jump-start Microsoft's on-demand offerings. 5) Become a third alternative in addition to SAP and Oracle in the enterprise application market. 6) Hamper Oracle's CRM and vertical-markets thrusts. 7)Challenge SAP for dominance in CRM. 8)Give small and medium-size business a migration path to full enterprise applications as they grow. 9)Acquire a direct sales force that will be useful in selling all sorts of corporate software.
There's logic and common sense in all of these suggestions, but I think there's a fundamental flaw in thinking, as well. Microsoft is loaded with legacy software designed for an earlier (pre-Web) era of computing. Buying Siebel would saddle it with yet another portfolio of legacy software. In fact, unlike much of Microsoft's own software, Siebel's stuff is very complex and expensive--just the kind of stuff many corporate IT purchasers are trying to get away from. If Microsoft is to eventually make an entry into the enterprise applications business, it would be far better off building new applications from scratch, designed for the on-demand world.