Oracle’s acquisition of Siebel Systems may better position the ERP (Enterprise Resource Planning) vendor to compete with industry bellwether SAP, but it may also make them less able to innovate, and compete with smaller, nimbler CRM vendors like Salesforce.com, Info-Tech Research Group said today.

"By purchasing Siebel, Oracle has acquired an additional 3.4 million CRM (Customer Resource Management) users and the maintenance fees that go with that kind of installed base," says Janet White, an analyst with the research firm. "However, where Oracle may be able to compete with SAP on numbers in the short term, they may have trouble competing longer term on product innovation.

"Oracle is an applications company and it only makes sense that they will want to eventually move acquired customers over to their technology stack," says White. "But how much time will Oracle really have to integrate its existing portfolio, or create innovative new products, when it has to spend most of its time maintaining disparate, monolithic systems acquired through its recent acquisitions of PeopleSoft, JD Edwards and now Siebel ?" asks White.

"CRM products from vendors such as Salesforce.com and RightNow Technologies are fairly easy to get up and running. Mid-market enterprises may decide to make the shift from Siebel On-Demand to one of these companies, rather than do business with Oracle," White believes.