Looking out for no. 1

It was quintessential Larry Ellison. "In a single step, Oracle becomes the No. 1 CRM applications company in the world," Oracle's flamboyant CEO trumpeted in the recent announcement of his US$5.85 billion acquisition of Siebel Systems. The buyout will "strengthen our No. 1 position in applications in North America", he proclaimed, "and move us closer to the No. 1 position in applications globally."

"No. 1." Repeating it over and over probably gives Ellison more of a rush than sailing a racing yacht ever did. Being No. 1 means the world to him. But it's a lousy reason to undertake a business transaction that affects and concerns so many users.

Oracle president Charles Phillips claims that the deal was a "customer-driven event" and that "joint customers have consistently recommended this transaction to both companies for over a year". That's probably not far off the mark. After all, "joint customers" is just another way of saying "Siebel users", and Lord knows those users have every reason to want to see something done to prop up a company that's been suffering mightily because of persistent management and execution problems.

But what about everybody else? What about all those companies that are locked into Oracle and are already concerned about Oracle's wherewithal to integrate PeopleSoft (and, by extension, JD Edwards) without a negative impact on overall product development and support? And what about Ellison's own proclivity to tout the merits of the organically grown application suite while scoffing at Siebel's strategy of growth through acquisition?

Reporter Marc Songini brought to my attention several excerpts from Softwar: An Intimate Portrait of Larry Ellison and Oracle, the 2003 book written by Matthew Symonds in collaboration with and featuring commentary by Ellison. Some of the stuff Ellison said in the book about Siebel is remarkable. Check this out:

"Could we have caught up with Siebel any faster? Sure. All we had to do was buy a bunch of companies like they did. But we wanted to stick to our product strategy of an integrated suite built on top of a common database. The only way to get one of those is to build it from scratch."

And further: "I'd put Siebel and i2 into the same category. Why? Their stuff is expensive to install, integrate and operate... Oracle and SAP are rapidly getting i2 out of our ERP accounts. We'll get Siebel out, too."

And then the piece de rsistance: "Siebel built [its] feature-rich portfolio of CRM products by acquiring lots of different CRM companies... But it's not a true suite. The products are barely integrated, and they don't share a common database. Writing cheques is easy. Writing software is hard."

The about-face is dizzying. It's all so self-serving that it borders on distasteful. Even the timing of the announcement was self-serving. A journalist colleague mentioned to me last week that he found it peculiar that the announcement was made on the same day that Reuters and other media outlets reported that Ellison was close to settling a 2001 insider trading lawsuit with a tentative agreement to pay $100 million to charity. Peculiar indeed. I agree with the assessment that it's all too similar to the plot of Wag the Dog, the 1998 movie about a spin doctor who creates a fake war to divert attention from a presidential scandal.

It's all about looking out for No. 1. What's unfortunate is that in Oracle's case, that's not the customer.

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