Oracle’s Siebel Acquisition Could Benefit Insurers

Further enhancing its stature as a global business applications giant, Oracle (Redwood Shores, Calif.) has acquired Siebel Systems (San Mateo, Calif.) for $5.58 billion. As a result, Oracle has expanded its repertoire to include development of core insurance applications.

Oracle, which acquired PeopleSoft in December 2004 for $10.3 billion, will combine Siebel's OnDemand solution with Oracle's own horizontal CRM and business applications to offer a next-generation suite of products called Project Fusion CRM. Oracle President Charles Phillips says that Oracle "will embrace Siebel's best-in-class CRM products and make the features of those products the centerpiece of our Project Fusion CRM."

Siebel's CRM product and its compensation management and claims package give Oracle penetration into insurance vertical applications, which could lead to favorable results for insurance companies.

"If you were a CIO and had Oracle in your infrastructure, and, if five years from now, Oracle has been successful in pulling together all of its acquisitions to have a legitimate package in claims or policy administration or underwriting, then, as a CIO, you're thrilled," says Marc Cecere, vice president of Forrester Research. "Now you have a company providing your infrastructure and financials and ... vertical applications for CRM for insurance, as well as having a nice package for integrating pieces of your legacy systems."

The question is whether the software giant can pull it off. "They have been very acquisitive in the last couple years," Cecere relates. "It's a good move for Oracle, buying both PeopleSoft and Siebel, in that it does give them that vertical presence. But it's only a good move if they find a way to integrate the pieces of the acquisition," he adds. "That means integrating the architectures and pulling together the sales force -- which are just huge challenges."

If Oracle successfully meets the integration challenge, the company may be able to come up with a product to leverage against competitors such as Microsoft, IBM and SAP, offers Stephen Forte, senior research analyst at Gartner.

For example, argues Forte, "If Oracle really wants to make a splash in the insurance industry, they'll take a look at what Siebel was doing in compensation management and in claims, and maybe try and build upon that."