Oracle vs Salesforce.com Case Analysis: Competition on Hosted CRM. In order to compete with salesforce.com in On Demand CRM as well as maximize profits from the Siebel acquisition Oracle needs to: Add on to the hosted CRM services acquired with the acquisition of Siebel Optimize Siebel’s packaged software line Our Recommendation: Develop a more nimble and customizable product Target small and medium businesses Offer a competitive price

1. <Insert Picture Here>
Demin Wang, Si Han, Trevor Brown, Justin Brown
vs salesforce.com

2. Summary Analysis
In order to compete with salesforce.com in On Demand CRM as well as
maximize profits from the Siebel acquisition Oracle needs to:
• Add on to the hosted CRM services acquired with the acquisition of Siebel
• Optimize Siebel’s packaged software line
Our Recommendation:
• Develop a more nimble and customizable product
• Target small and medium businesses
• Offer a competitive price

3. Key Problems for Oracle
• Competition with salesforce.com for the hosted CRM market share.
o Embrace aspects of salesforce.com that make it successful or go another direction?
• How can Oracle ramp up hosted CRM sales without cannibalizing other
products?
o Packaged CRM software products need to maintain profitability!
• Need to increase On Demand seat licenses
as a way to increase revenue and compete
with salesforce.com.

4. Target New SMB Customers
Focus on market development strategy
• Custom-built in-house solutions represented as much as 75% of the total market for
CRM solutions in 2005
• On Premise vs On Demand users = 7,000,000 vs 600,000
• Hosted Siebel vs Salesforce subscribers = 49,000 vs 399,000
Focus on small and medium customers
• Large companies – Packaged
o High demand of customization
o IT integrated
o Data security
o High revenue
• Small/Medium companies – Hosted
o Cost sensitive
o Basic function oriented
o Growth segment
o Hard to direct sales

5. Oracle vs salesforce.com
Oracle [ what we have now ]
• Larger user base
• Long product line
• Brand equity
• Cost sharing
• Distribution channel
Salesforce [ what we have to do ]
• SaaS CRM industry leader
• Integrated software / product offerings
• Well designed go-to-market model

6. SaaS Requirements
• Lower cost
o Save 69% for the first year, and 49% over five years [midsize businesses]
• Pay by month
• Easy start
o Does not need third-party to launch product
• Quick start
o 30 days with salesforce.com benchmark
• Software updates are free
• Ensure reliability and data security

7. Possible Solutions
The possible solutions are discussed on three dimensions:
• Product Edition Options
• Product Functionality
• Pricing Strategy

8. Product Edition Options
One Edition
• Target SMBs and offer full access to all functions within the software
Multiple Editions
• Standard EditiOn target at small businesses. Include the hosted standalone CRM
solution with full administrative capabilities
• Premium EditiOn target mid/large size business. Include all the functions of the standard
version and offline features. In addition, offer access to other Oracle cloud applications
such as cloud analytics

9. Product Edition Options continued
One Edition
• Lower development cost
• All customers have the same
functionality
• Easy to manage new features
• Standard price
Multiple Editions
• More choice for customers
• Discriminate price to maximize
market share
• Low entry barrier for new
customers

10. Functionality Options
Vertical Editions
• Design edition for different industries (financial services, technology, life sciences, etc.)
Customization
• Allow users to build customized add-ons on the hosted service to achieve specific
functions.
• Allow customers to share custom-built applications and modules on platform

11. Functionality Options continued
Vertical Editions
• Reduce the cost to configure
software
• Keep the stabilization of platform
• Easy to manage
• Higher security
• Easy for marketing
Customization
• Lower development cost
• Customization ability
• Ecosystem - more opportunities
• Ensure large companies’ integrated
demand
• Increase customer stickiness [opt
out cost]

12. Price Options
Remain at a higher price
• Oracle brand name
• Better product
• Reference pricing
Lower price to penetrate market
• Lower cost because the cost can be shared with other product lines
• Good for marketing
Multiple price solutions to fit multiple editions strategy
• Offer a basic model at a lower price, and a ‘premium’ version at a higher price

13. Current Price Model

14. Competitive Price Model

15. Multiple Price Model

16. Pricing Model Analysis
Assumptions
• Current Price Model would continue to have low single digit growth
• Competitive Price Model and Basic Price Model would have large growth potential
• Many current hosted customers would convert to the Premium Price Model
Results
• Current Price Model’s premium price will inhibit market penetration
• More overall customer growth with the Competitive Price Model, resulting in higher
revenue potential
• Basic Pricing Model’s higher % growth is offset by Premium Model’s growth mix

17. Recommendation
Single Edition Product
• Leave premium services in software product to reduce risk of product cannibalization
Customizable Functionality
• More competitive with salesforce.com, focus on vertical functionality in the future
Competitive Price Model
• Pricing model offers the largest revenue potential
• Largest customer growth projects