<Insert Picture Here>

Demin Wang, Si Han, Trevor Brown, Justin Brown

vs salesforce.com

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

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.

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 customizationo IT integratedo Data securityo High revenue

• Small/Medium companies – Hostedo Cost sensitiveo Basic function orientedo Growth segmento Hard to direct sales

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

SaaS Requirements

• Lower costo 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

Possible Solutions

The possible solutions are discussed on three dimensions:

• Product Edition Options• Product Functionality• Pricing Strategy

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

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

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

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]

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

Current Price Model

Competitive Price Model

Multiple Price Model

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

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