Oracle Pulling IBM From Siebel CRM OnDemand

The Big Blue back-end powering Siebel's CRM OnDemand hosted software service is being ripped out and replaced with Oracle's own hosting infrastructure, Oracle President Charles Phillips said Monday on a conference call with press.

Launched in Oct. 2003, Siebel CRM OnDemand was initially positioned as a joint offering with IBM, which hosted the service's customer data on its infrastructure and database software. Siebel was IBM's highest profile software-as-a-service client, and the two companies cultivated their close ties. In Oct. 2004, Siebel and IBM announced a five-year deal to build a new service center and to more tightly link their delivery capabilities.

But Oracle's announcement last September that it would acquire Siebel raised immediate doubts about how long Siebel's OnDemand alliance with IBM would last. Siebel's products chief, Bruce Cleveland, said at that time that Siebel's OnDemand system has no technical reliance on IBM's infrastructure and that if an Oracle switch proved attractive, Siebel would migrate. (Cleveland announced his departure from Oracle last week, for a partnership position at venture capital firm InterWest Partners.)

That migration has come to pass. Phillips said new Siebel CRM OnDemand customers are already running on Oracle's technology stack, and that existing ones will be transitioned this summer.

The move will be seamless and beneficial for users, he pledged.

"Typically, in our on-demand systems, we don't take them down for maintenance," Phillips said. "That's not possible on the current infrastructure."

The switch will also save money for Oracle, though Phillips said the company doesn't plan to lower its prices for the hosted CRM service.

An IBM representative was not immediately available to respond to a call for comment.

Financial analysts had predicted Siebel's IBM contract would be a quick casualty of its Oracle union. "We expect Oracle to redeploy many of the Siebel On Demand customers to its own datacenter as quickly as possible," JMP Securities analyst Patrick Walravens wrote in a note to clients last week. His research suggested Siebel was forking over as much as 50 percent of its on-demand contracts to cover IBM's hosting fees.