Microsoft's Switch From Siebel CRM To Dynamics Speaks Volumes
The "moat" around Oracle's CRM products that once kept customers from leaving is drying up as Fusion comes up short and more viable options emerge.
One of the many interesting revelations that came out of Microsoft's recent Convergence user conference was that Microsoft has successfully weaned itself from its massive Siebel CRM deployment, in favor of its own Dynamics CRM. It was an interesting comment on the viability and scalability of Dynamics CRM that's worth exploring, particularly in light of the some of the post-hoc analysis of the back-story behind the switch.
Perhaps the most interesting comment comes from blogger Dana Blankenhorn, who opines that, rather than a negative for Oracle, the five years it took for Microsoft to make the shift shows how strong the "moat" around products like Siebel is. "If it takes Microsoft five years to switch CRMs," Dana says, then prospective Dynamics CRM customers should ask "how long will it take them?"
It's a good question, but the answer isn't going to be about the same five years that Microsoft spent moving off Siebel--not by a long shot. And rather than being at all positive for Oracle, the Microsoft replacement indicates just how vulnerable Oracle is becoming as its core legacy products age and its new Fusion products fail to excite customers.
Indeed, the question of how long it takes to move from Siebel to Dynamics CRM really begs a couple of important issues. The first is the implication that the same migration that took five years, starting in 2007, would take five years if it were started in 2012. The current version of Dynamics CRM is a very different from the one Microsoft had available in 2007, in terms of scalability, deployment options (the on-demand version wasn't available then) and overall functionality. My Microsoft sources tell me that a massive migration of tens of thousands of Siebel users today would take significantly less time, depending on how much back office integration and customization is needed. And even more time can be saved if the deployment is done on Azure.
[ Want to read more about Microsoft Dynamics? See Microsoft's Answer To The End Of Software. ]
Perhaps more important is that Microsoft didn't set out to do a Siebel replacement in 2007; the replacement project didn't start in earnest until several years later. The original impetus to use Dynamics CRM in-house came from various groups of internal users who felt that it was better to leave Siebel on the shelf than try to work around its limitations. Dynamics CRM was brought in to keep them from devolving back to Excel. As the number of internal users and the robustness of Dynamics CRM grew, it became clear that it was cost-effective and a good overall business decision to go whole hog with Dynamics CRM.
While it's probably true that Microsoft wouldn't have likely replaced Siebel with another Oracle product, the fact that Siebel customers now have many viable alternatives makes Dana's concept of an Oracle moat look a little shallow. And the fact that Fusion CRM doesn't have anywhere near the vertical industry coverage of Siebel makes it much easier for Siebel customers to look outside the red box for their next generation CRM product. This situation is similar to the dilemma facing Oracle's PeopleSoft customers--as Oracle lowers the support window for older PeopleSoft versions, the inability of Fusion HR to cover similar functionality as PeopleSoft HR makes it relatively easy for these customers to look to competitors like Workday and SuccessFactors.
And the fact that Microsoft's migration to Dynamics CRM has saved it a reported $10 million per year also speaks to what's left of the "moat" once a migration is over. Even if Oracle could retain a customer the size of Microsoft with its Fusion CRM product, it would have to expect that both license and therefore maintenance revenue would be significantly lower than the original Siebel implementation.
As Dana is writing for a financial blog, I'll close with a little red meat for investors. The moat that's represented by Oracle's maintenance revenue stream is going to dry up for a host of reasons, and the relative feature, functionality, and price of its products is an important one. Ending support for key products and increasing competitive choice for its core products are also issues. And the over-emphasis on hardware to the detriment of applications is the final point: Oracle made a choice last fall to make OpenWorld predominantly a hardware show, and its applications customers have been voting against this ever since.
If Oracle would take some of that aggressive market energy and pour it into making things right for its applications customers, I think the market would respond positively. It still has great products, great people, and happy customers. But for now, the moat that Dana refers to is more like a swamp, and Oracle seems to sinking further and further into its mire.
Josh Greenbaum is principal of Enterprise Applications Consulting, a Berkeley, Calif., firm that consults with end-user companies and enterprise software vendors large and small. Clients have included Microsoft, Oracle, SAP, and other firms that are sometimes analyzed in his columns. Write him at [email protected].
InformationWeek is conducting a survey on the state of enterprise applications and business processes and organizations' priorities in evolving technology over the next 12 to 24 months. Upon completion of our survey, you will be eligible to enter a drawing to receive an 32-GB Apple iPod Touch. Take our Enterprise Applications Survey now. Survey ends April 20.
About the Author
You May Also Like
2024 InformationWeek US IT Salary Report
Aug 15, 2024Managing Third-Party Risk Through Situational Awareness
Jul 31, 20242024 InformationWeek US IT Salary Report
May 29, 20242022 State of ITOps and SecOps
Jun 21, 2022