October 18, 1999

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Why Siebel Matters
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The Modern Call Center Customers Get Royal Treatment

Other customers have similar experiences. Cymer Inc., a San Diego company that builds lasers used in manufacturing semiconductors, became a Siebel customer when Siebel bought Scopus. Cymer took that opportunity to help Siebel shape the new, integrated suite, and was able to get features that matched its needs closely. "Siebel has listened very carefully to our requirements," says CIO Roger Green. "They've tried to respond to products that can fit our needs."

Still, the line blurs somewhere between being customer-oriented and sales-driven. "I've never seen a company that was so horrible before the sale and so great after it," says a consultant who's been involved with dozens of Siebel implementations. Of course, Siebel couldn't achieve its astounding growth without an emphasis on sales. But the consultant says salespeople tend to push products that are quickly purchased and implemented, rather than a suite of applications that may have a longer sales cycle. "They have to work on letting companies build a broader CRM implementation," the consultant says.

Siebel expects to continue to build market share and grow revenue ahead of the market's annual pace, which AMR pegs at 49%. Tom Siebel dismisses competition from enterprise resource planning vendors such as Oracle and SAP, which are casting long shadows over the front-office market. The needs of the front office and its users are so different from the back office, he says, that ERP vendors will have trouble penetrating CRM.

The vendor shouldn't be so glib about external threats, analysts and customers say. "They should begin looking at their competition more seriously," says Citibank's Clarke. "Siebel's the front end, but the knowledge has to come through the pipes of your business," which companies like SAP control. Although Citibank has standardized on Siebel, Clarke says an integrated SAP package would be an attractive option. "That's really a threat," she says.

Oracle, Tom Siebel's old employer, is a particular threat. Siebel may be No. 1 in CRM software, but Oracle is No. 2 with a bullet--growing even faster than Siebel, with expected CRM revenue of $398 million for 1999, a 200% increase over last year. Oracle has developed a CRM package that analysts say is beginning to rival Siebel's in breadth. Moreover, it's readying Oracle 11i, an application suite that integrates CRM with supply chain and ERP systems. Analysts say that may attract users who don't want to have to link data in separate application packages. "Customers will pay a premium for integration to the back office," says Steve Bonadio, an analyst with the Meta Group.

Tom Siebel dismisses his rival with typical bravado. "Oracle's been making a lot of noise in this space," he says. "But every quarter, they've been two quarters away from us."

Despite the rhetoric, Siebel seems to be aware of its vulnerability--one of its next major steps is to provide tight integration with common enterprise application systems such as PeopleSoft, SAP, and even Oracle. While the company already writes to common programming interfaces for such applications, Siebel 2000 will have connectors that will let its applications plug in to back-office products.

A more pressing concern for the company may be its ability to manage dizzying growth. "Are they growing too quickly? Are they burning out too fast?" says Marriott's Dalton. Still, he believes Siebel has it in hand--so far.

Some customers fear Siebel's rapid growth may make it difficult for the company to continue its hands-on approach. "For us to keep a place in the sun with Siebel and continue to influence products will probably become harder," says Cymer's Green.

Those are valid points. The company has roughly doubled in size over the past year, both in dollars and people; it grew from about 1,200 employees to more than 2,500 in 10 months. To handle--even accelerate--that growth, chief operating officer Wahl has put in-place training and recruiting programs that have attracted seasoned enterprise application executives from competitors such as SAP and Oracle, and is recruiting engineers and MBAs from top-rank business schools, such as Harvard and the University of Pennsylvania's Wharton School. To ensure the company's culture isn't lost, says Wahl, "We're focusing on programs that actively transfer knowledge" to new employees.

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Photo of Siebel and Dalton by Peter Lopez

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