IBM out, Oracle in for Siebel CRM OnDemand

The worst kept secret in the CRM industry was confirmed this week when Oracle admitted that future iterations of Siebel CRM OnDemand will be hosted by it and not IBM.

Siebel signed a deal with IBM in 2003 to host its Siebel CRM OnDemand applications. As recently as this month Oracle executives were still insisting that they did not know whether Oracle would oust IBM from this arrangement, although few observers believed that any other outcome was likely.

So no-one dropped down with shock when Oracle president Charles Phillips said this week that new customers for the CRM applications will be serviced by Oracle while existing customers will be moved from IBM to Oracle over the next two months.

He insisted that Oracle can host the CRM applications with better performance and availability using its own data centres, adding that an Oracle-run service would be less expensive as well. He did not announce a reduction in the cost of the service to customers as a result.

He also appeared to raise the prospect of Fusion - Oracle's next generation applications - not being offered on any other database than Oracle, saying that the applications will include class libraries that use "unique features" of the Oracle database.

Meanwhile Oracle is boasting of an upturn in the performance of its applications business. Oracle's applications business was the fastest-growing segment in the fiscal fourth quarter. New software licence revenue from applications in the period hit $640 million, up 83 per cent from the quarter a year ago.

Total applications software revenues for the period hit $1.3 billion, a 66 per cent increase from the fiscal fourth quarter of 2005."We saw extraordinary growth in the quarter," said Oracle CEO Larry Ellison. "We are growing the applications business faster than SAP."

Of course those numbers are boosted by acquisition. In the fourth quarter, Siebel CRM software contributed $81 million to the total, nearly double what Oracle had expected.

But there is still organic growth, insisted Oracle president Safra Catz. "We can't tell at this point if it's an IT spending indication or a direct response to the state of the economy or people getting more comfortable with Oracle and buying more products," she said. "But it does seem more Oracle-specific."

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