The fallout from enterprise software consolidation isn't going to end any time soon, which will leave IT organizations to decide whether to stay the course or switch suppliers.
So said IT consultancy Robert Frances Group in a briefing about software industry consolidation.
John Van Decker, RFG vice president and research fellow, said IT organizations in general should be looking at acquisitions like Oracle's $5.85 billion purchase of Siebel as a sign of more to come.
"We're seeing Microsoft get into the business intelligence space and I think that's going to put a lot of pressure on BI vendors to start looking for White Knights [to buy them]. There's going to be continuing competitive pressure on enterprise application vendors."
RFG predicts that by 2007, only four main ERP (define) vendors will remain: SAP, Oracle, SSA and Microsoft. The result will be fewer choices for users, though the competition among the remaining vendors for customers will be more intense. Also, RFG believes more industry-specific vertical applications will emerge. "This is what happens in mature markets, there is less choice for customers," said Van Decker.
In the case of Oracle, (Quote, Chart) Van Decker said existing customers have to speak up to make sure the database giant lives up to its promise of supporting the product lines it's acquired or acquiring from Siebel, Peoplesoft and J.D. Edwards. "Over time customers can get screwed unless they voice their concerns," said Van Decker.
Oracle has said repeatedly it plans to continue development of Peoplesoft applications and offer lifetime support of its products. But Van Decker expects Oracle to spend more resources advancing development of its own software, giving customers little choice over time but to migrate to Oracle or elsewhere for advanced features. "If you want the latest stuff it's going to be on Oracle's Project Fusion," said Van Decker.
Mergers often also result in key personnel leaving, which can affect product development. "In the case of Peoplesoft, I'm encouraged that many of the key thought leaders have moved over to leadership positions at Project Fusion," said Van Decker.
Research conducted by Extraprise, a Siebel marketing partner, at last week's Siebel CustomerWorld show, indicated only a slight majority of Siebel customers believe the company's merger with Oracle will have a positive impact on their organization's CRM strategy.
More than 55 percent of respondents said the merger would have little or no effect on their own companies, and 56 percent said they are comfortable staying with Siebel following its merger with Oracle. More than 76 percent plan to continue using their existing Siebel applications. Extraprise said it surveyed 200 attendees.
Extraprise predicted that Oracle/Siebel would retain most of its best customers due to the companies' track record, incentives, and the difficulties that migration away from Siebel presents. While some respondents voiced a concern about being forced to migrate to PeopleSoft/Oracle applications, less than 4 percent said they would migrate away from Siebel applications as a result of the merger.
"Despite the acquisition by Oracle, sophisticated sales and marketing executives will continue to leverage Siebel's market-leading applications if they remain the best fit for their organization," Chad Gottesman, vice president at Extraprise, said in a statement.
As for antitrust concerns holding up future mergers Van Decker said it depends on the deal. "A lot of people thought Oracle buying Peoplesoft would be held up but [the government regulators] saw Microsoft and SAP out there as enough competition. If Oracle and SAP or Microsoft and SAP proposed a merger I'm sure that would be a bigger issue, but other's that have been talked about like Oracle buying BEA I think probably not."
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