October 18, 1999

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Why Siebel Matters
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But observers inside and outside say the company isn't comfortable with its size--Siebel still acts at times as if it were a small business selling to a cozy network of partners and acquaintances. Nowhere is that more apparent than in its marketing operation, handled by co-founder House. "They're the shoemaker's daughter," says Citibank's Clarke. "They sell marketing technology, but don't seem to use it." In particular, she says, the company needs to form a consistent marketing message around the world.

Another potential weak spot for Siebel is the growing complexity and cost of the software, which are more typical of the ERP market than traditional front-office products. The 117 applications, which look impressive on a product sheet, can bedevil an implementation. Siebel's average sale is $750,000, but that figure can accelerate quickly with implementation and service costs.

Nationwide Insurance Enterprise spent $9 million on its initial Siebel purchase in 1996. But the cost has soared to more than $100 million, says a source close to the deal. And the implementation has been stopped dead in its tracks since December because of performance, support, and training issues. Of those, training has been the most difficult, says Joe Pizzi, associate VP for agency technology at Nationwide, because Siebel is difficult to use for the nontechnical insurance agents, and because Siebel didn't have a formal training program in place. The Columbus, Ohio, company has adopted Internet training software from Centra Software Inc. to recoup its investment in Siebel. "There was no way to effectively get our agents to use Siebel without a better game plan for training," Pizzi says.

Other companies agree that Siebel needs to improve its training. Ford's Veros says the only hang-up in its Siebel implementation came when it brought in a Siebel partner to handle training. It was a frustrating experience, Veros says, because the partner didn't seem to be familiar with Siebel. The pain ended only when Ford's own staff took a leading role in the training. "Training is so imperative," Veros says. "You can have the best product in the world, but if you can't transition people on the front line to the product, then what do you have?" Siebel took steps to boost its training capabilities with the acquisition last year of the 20/20 Group Ltd., which handles user training.

Despite the size of Siebel's application suite, the vendor still has some substantial holes. Although Siebel built marketing automation into the release of Siebel 99 last fall, it's a fairly bare-bones implementation, analysts say, relying primarily on a data mart and campaign-management system. It falls short of the capabilities offered by more-specialized marketing vendors such as MarketFirst Software Inc. and Rubric Inc., leading some observers to speculate that Siebel may have to buy cutting-edge marketing technology, possibly by acquiring a niche vendor.

Another area in which Siebel appears to lag is in Internet support. Oracle and Siebel recently competed for Hewlett-Packard's CRM business. Siebel lost to Oracle, HP executives say, because Oracle's Internet technology is more sophisticated.

Not that Siebel isn't saying the right things--the company refers to its applications as Web-enabled. But analysts say it has far to go. "Their new release has all sorts of E's in it," says Robert Mirani of the Yankee Group. "But it's going to take another rev or two of their product before they truly get to the Internet."

While the software can be accessed via a Web browser, it still uses what's essentially a client-server architecture--not entirely a bad thing, according to some customers. "There's further work that has to be done to move to an Internet architecture," says Cymer CIO Green. "But some of the things we do require a thicker client." Cymer is using Siebel to relay up-to-the-minute instructions to service technicians as they repair lasers. That's information the company would rather not have supported by a thin Java client.

With Siebel 99.5 a few months ago, the company added E-commerce capabilities, but Siebel promises substantial E-business enhancements next year with Siebel 2000. A major effort in the new application release, executives say, will be integrating all the channels companies use to contact customers: Web, E-mail, voice, and face-to-face contact. "The Web is a great technology, but the Web won't be enough," Wahl says.

In fact, Siebel executives don't seem too concerned with cutting-edge technology. The company will never pin its hopes on the Internet and thin clients the way Oracle has, or on Windows the way Microsoft has, says Wahl. Its architecture has to be good, but just "good enough to support the functionality its business users are demanding."

Similarly, Tom Siebel attributes his company's success mostly to the right focus, and partly to good timing. "Are we a maker of 'insanely great' technology? No," he says. "But we're in a market that's expanding like crazy. And we've managed not to foul it up."

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Photo of Siebel and Dalton by Peter Lopez
Photo of Veros by Peter Lopez

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