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Monday, October 31, 2005

Bad idea: Microsoft bid for Siebel

Forrester has an interesting angle on Oracle's bid for Siebel. The research firm thinks that Microsoft should step in and make a counter offer. Interesting, but wrong. I think that a Microsoft acquisition of Siebel would be a disaster for both parties.

But first, Forrester's idea. The article is entitled, "Memo to Microsoft: Why Not Buy Siebel?" The abstract reads:
Microsoft: You have a unique opportunity to change the dynamic in the enterprise applications market. With Siebel's strong enterprise customer base, domain expertise in verticals, integration with existing Microsoft technologies, and interoperability with .NET and J2EE, this is a unique opportunity to bring much-needed CRM credibility to the Microsoft Business Solutions Group. If Microsoft does not make the offer to purchase Siebel, you will lose a unique opportunity to Oracle, leave only two tier one players in the applications market, and make a later entry into the market more costly and more risky.
A Microsoft acquisition of Siebel would be foolish because Siebel's client base requires a significant amount of professional services, something that is foreign to Microsoft's business model.

Interestingly, a Spectator reader and I had some correspondence on this very subject last week. He wrote,
IBM/HP-like consulting does not fit the Microsoft model. Microsoft is more about delivering packaged software to a customer through a product management process (exaggerating -- in its worst incarnation -- throwing a half ready app to the customer). In a consulting business you need to listen to the customer and understand the problem in order to find a solution--if necessary, pushing it through as a side product, and enhancing the product over time.

What is meant by consulting at Microsoft is way different from the definition at IBM.
Microsoft's foray into business applications, with its purchase of Great Plains and Navision, has already been a humbling experience (Microsoft's words, not mine). Its business applications are sold entirely through VARs and resellers. Siebel's products are sold largely through a direct sales force, something Microsoft Business Solutions has never really done. So, even though Siebel's technology is Microsoft-friendly, I think that Siebel is a bad fit for Microsoft's business model.

Now, on the other hand, if IBM, HP, CSC, or any other number of large service organizations wanted to step in and make a counter-offer for Siebel--now that would be an interesting proposition.

Related posts
Another false start for Microsoft's business apps
Reorg highlights troubles at Microsoft Business Solutions
Microsoft: selling enterprise software is a "humbling experience"
Big eyes, big stomach: Oracle buying Siebel

by Frank Scavo, 10/31/2005 02:01:00 PM | permalink | e-mail this!

 Reader Comments:

Siebel can teach Microsoft something about building enterprise apps. Microsoft can teach Siebel a thing about making it easy to use.

How does the GM of Microsoft keep his/her job if they take this long to integrate 4 money losing companies? I would think that person would be fired by now.

Buying Siebel will help them get to the next level and yes, it requires consultants but Siebel will pay for itself in 3 years time.
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