Siebel Systems and Oracle are squaring up for what looks like a battle royal for dominance of the lucrative customer relationship management (CRM) market.
But, while IDC believes that the CRM sector will be worth around $1.5 billion this year, GartnerGroup reckons that the market for overall customer care is fragmented so there is still plenty to play for.
In mindshare terms, Siebel commands a leadership position, although largely in sales force automation (SFA), and the firm now hopes to extend this into the customer care and other ?relationship? aspects of the overall CRM market.
But Tom Siebel, Siebel?s chief executive, is very aware of the potential competitive dangers and says that since 1995, he has run the company on the premise that "We?ve only got 18 months to live."
This translates into a slew of more than 100 products across a number of market segments, but with the emphasis on financial services, telecommunications, insurance and pharmaceuticals.
However, recent announcements from Oracle about its planned foray into the market have clearly stung Siebel enough to release a stream of invective worthy of one of his previous employers ? Larry Ellison, Oracle?s chief executive.
"Apart from databases and consultancy, Oracle has failed in every applications area it has entered since the early 1990?s. Today, it doesn?t matter which segment you place them in, they?re either fourth or fifth. They get creamed by SAP," he claims.
As for Oracle?s recent advances into the CRM market, he adds: "Oracle?s making a lot of noise, but we don?t want to get bamboozled by great marketing. It?s just noise. This is its fourth major introduction in this market - it?s got no product and it?s not made a single nickel in revenues."
But Siebel does recognise that Oracle has the potential to make a big splash if it has the right product and support mechanisms in place.
"If it produces a great product with high quality professional support then yes, it will be a threat," he says.
Mark Barrenchea, Oracle?s senior vice president of CRM products, hit back with an equally savage salvo, however.
Claiming he does not wish to be drawn into marketing hyperbole or rhetoric, but wants to concentrate on facts, he attests: "Quarter on quarter, we?re growing this revenue stream by 300 per cent. By the end of the year, we will have caught up with Siebel?s main competitors, Vantive and Clarify, and will be poised to overtake Siebel Systems."
This would imply, however, that Oracle?s current CRM revenues are only about $3 million per quarter.
While aggressive posturing is a luxury that market leaders can afford, in the CRM market, it is difficult to see where any serious competition to Siebel will come from - according to analysts, it is at least twice the size of any of its immediate rivals.
Neither does Siebel face any real competition productwise from enterprise resource application (ERA) vendors.
Jim Holincheck, senior analyst at Giga, says: "Oracle is the only (ERA) company with a credible story today, although Baan?s Aurum is pretty good on the sales force automation side."
And Siebel agrees that the lack of product competition "makes life more difficult ? we know the competition is there, we?re just not sure who it is."
Oracle?s Barrenchea did not agree, however. "It?s hard for the number one vendor to acknowledge competition - its stock would fall in half overnight if it did that. That?ll be true even when we?re be stomping on their grave."
But Oracle itself is being anything but idle. Barrenchea says the supplier has put more resources behind its CRM division than any other of its application businesses in recent times.
"The senior management team is 100 percent aligned behind this. They can all discuss the issues from a position of intimate knowledge," he adds.
While the company would appear to be committed to the market, employing 650 people in CRM development alone, people are not enough.
Oracle is staking its applications life on Internet based, centralised systems that break with the client/server mould, claiming it will succeed over Siebel on application design grounds.
"Tom (Siebel) is client/server, it is antiquated and if he stays in that market over the next six to nine months, then its over," attests Barrenchea.
But Phil Robinson, Siebel?s senior director of marketing and alliances refutes this argument, observing that with Siebel 99: "We can do this soup to nuts through the Web."
However, in Barrenchea?s view, Siebel?s approach presents customers with a complex environment, which requires user training and additional services. "You look at what Siebel is providing and you?re faced with a lot of costs," he says.
While that may be true at the client end of the system, the Internet based approach means that complexity is simply transferred to the server.
But Barrenchera counters this argument by claiming that, at the implementation stage, only a single instance of an Oracle application needs to be amended, while changes have to be made in every instance of a Siebel package.
And Siebel?s Robinson does not deny that changes are inevitable when developing a system. "Wherever there are different business processes, one makes changes, noone avoids that," he says.
In the meantime, despite recent stories about problems at headline customer sites, Siebel insists that the company is playing ?close attention? to customer satisfaction issues and undertakes independently audited customer satisfaction reviews. He refused to make the information public, however.
But John Bermudez, an analyst with AMR Research, advises caution when interpreting statements about this issue.
"Keep in mind, there is a difference in SFA systems between users and the ?customer?. Sales management is often the customer, while the sales rep is the user. Management tends to be happy because they get more information than they ever had before. The sales rep has more data entry than he/she ever had before. So its possible to have satisfied customers and unhappy users," he explains.
Giga?s Holincheck continues: "I am aware that some of the former customers that Siebel has through the Scopus acquisition have been displeased with the heavy handed approach of Siebel?s upgrade insistence. They don?t view it is an upgrade at all."
And so the rhetoric continues. While Oracle is due to ship 36 new products into the CRM market next month, Siebel is making a concerted foray into the middle market with its Workgroup Server, which will be supported by inhouse support and services.
As a result, the jury is still out.
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