Oracle is taking over from IBM the task of hosting its Siebel CRM OnDemand applications, Oracle president Charles Phillips announced Monday. Phillips said new customers for the CRM applications are already being serviced by Oracle while existing customers likely will be moved from IBM to Oracle over the next two months.

Oracle can host the CRM applications at lower cost and with better performance and availability using its own data centers, Phillips said. Those centers utilize grid-computing architectures and the Linux operating system. Phillips said Oracle would continue to work with IBM during the transition.

Oracle acquired Siebel Systems in January for $5.85 billion. Siebel relied on IBM to host its Siebel CRM OnDemand applications through a deal struck in 2003. But many expected Oracle to end the relationship at some point given the vendor's efforts to expand its own application hosting business.

Yet to be determined is whether Oracle's next-generation Fusion applications, due for release through next year and 2008, will run on any other database besides its own. Phillips said Fusion will include class libraries that use "unique features" of the Oracle database and that Oracle is waiting to hear from other database vendors--presumably including IBM--whether they will incorporate those features into their database software.

Phillips also said that in September Oracle would provide owners of its acquired applications, including PeopleSoft, Retek, and Siebel, with integration and workflow capabilities to help link those disparate applications. Known as "Project Genesis," the effort will help pave the way for the Fusion applications. Phillips said the Project Genesis technology would become part of Oracle's Fusion middleware.

Last week Oracle announced its fourth-quarter financial results, including sales growth of 25% to $4.9 billion and an 83% increase in new application license sales.