Microsoft and Siebel on course for collision

Friends for the time being…

David Bradshaw, VP of Consulting

Microsoft and Siebel may be buddies for now, but it won’t last long. The two companies are on a collision course in the mid-market. Any agreement to be nice to each other will ultimately go the way of the former reseller agreement between Siebel and Microsoft-owned Great Plains.

At its user conference this month, Siebel had a surprise guest, Bill Gates, and a surprise announcement that it was partnering with Microsoft over using the .NET architecture. There was some very careful wording on both sides – Siebel says that it will ‘fully optimise’ its applications for .NET, although it stops well short of saying it will port its applications to .NET. The announcement is actually about application integration via an as yet un-defined ‘joint solution set’, though its significance is being billed as much wider.

Microsoft wants this relationship to prove the wider credibility of its .NET architecture in the large business application space. It is widely seen as good for smaller organisations but not for bigger players.

But why would Siebel want to buddy-up with Microsoft just now, especially when the latter is launching an assault on the CRM market?

Siebel the company and Siebel the man have been humbled by a really bad third quarter and expectations that the fourth quarter will bring more bad news. So it’s time to talk peace not war. The company has not yet adopted a fashionable ‘web architecture’ for its business applications, and people are beginning to ask questions about its architectural strategy. Partnering with Microsoft on .NET, and in the same breath mending fences with Sun over J2EE, diverts attention away from this fact.

However, neither announcement is about the core architecture of Siebel’s application itself. Rather it’s about Siebel’s Universal Application Bus, intended to connect Siebel to a wide range of business and infrastructure applications.

Siebel is hardly alone amongst the largest application vendors in sticking to its ‘legacy’ architecture and wrapping a web interface around it. Porting anything like Siebel, SAP, Oracle or PeopleSoft into a pure web-architecture is a massive undertaking: one that the large bizapp vendors are all shying away from.

So why will the Siebel-Microsoft relationship go bad? In the long run, Siebel and Microsoft will collide in the medium enterprise market. It’s where both companies are heading with their CRM products – Microsoft moving up, Siebel moving down.

The new accord means they will play by the rules for a while, divvying up the market. But sooner or later they will take the gloves off, as both companies invariably do, and the fights will be messy and bloody.

Related research and services:

SoftwareArchitectures@Ovum – Ovum Advisory

Web Services for the Enterprise: Opportunities and Challenges - September 2002

Ovum Software Evaluation Service (OSES)