Tech Managers Rethink CRM In Tight Economy

Reduced budgets and increased competition may make Siebel's latest CRM suite a hard sell

InformationWeek Staff, Contributor

September 28, 2001

3 Min Read

Siebel Systems Inc. faces a new set of challenges as it unveils the most comprehensive customer-relationship management package in its eight-year history this week. Siebel commands 56% of the CRM market and boasts 3,000 customers, but outside forces may make its new version a tough sell.

Business-technology managers are reassessing CRM deployments because of the economy and reduced IT budgets, and they may not be as willing to shell out six or seven figures for a new CRM package. And Siebel faces more competition than ever before.

AMR Research last week reduced its 2001 growth projections for the CRM market from 40% to 28%. Morgan Stanley estimates 10% to 15% growth per year through 2005. Gartner expects the software-purchase process to increase from 12 months to 18 months.

Siebel version 7 marks the vendor's move from a client-server to a thin-client architecture. It follows the industry's first thin-client, Web-based CRM suite, PeopleSoft 8, launched in June.

Some IT managers prefer to buy CRM applications from their enterprise resource planning vendors because integration is easier and cheaper. CreoScitex, a $700 million digital imaging company in Vancouver, British Columbia, chose SAP's CRM 3.0 suite after evaluating Clarify and Siebel. "We sell hundreds of relatively large systems every quarter, and we service them ourselves," says Dave Pritchard, ERP and CRM program manager. He wanted an integrated package that provides one view of customers. The company already used SAP, so choosing it for CRM eased integration.

Meanwhile, E.piphany and Kana have emerged as complete CRM providers, says John Ragsdale, research director for Giga Information Group. E.piphany, which offers Web-based sales, marketing, and campaign-management tools with advanced analytic capabilities, last week disclosed a partnership with Cisco Systems to merge analysis and customer-service software with Cisco contact-center apps.

Despite recent budget restrictions, Emerson chose E.piphany's customized implementation for its 16 business units; one major selling point was E.piphany's analytic capabilities, VP Peters says.

Charlie Peters, senior VP at Emerson, a $16 billion St. Louis electrical products manufacturer, chose E.piphany over Siebel because E.piphany customized the implementation for Emerson's 16 business units--a task Siebel wouldn't do. E.piphany's analytics also are further developed than Siebel's, some analysts say. Despite recent budget restrictions, Peters advises his divisions to make E.piphany analytics the foundation of all their CRM and database-marketing implementations. "Without analytics, it's a cumbersome process to manipulate customer data," he says.

The analytic capabilities in Siebel 7 have improved, but Siebel still must enhance and embed them in all of its CRM apps, Ragsdale says. Siebel also rewrote the user interface for the entire application suite, creating a no-code client that analysts say will lower total-cost-of-ownership expenses and save IT departments hundreds of hours in maintenance and implementation time. Siebel also used the same object-oriented design as its client-server suites, making its migrations easier than PeopleSoft's, Ragsdale says.

FleetBoston Financial Corp., a beta tester of Siebel 7, will upgrade its system early next year. Although the company is rolling out Siebel's Employee Relationship Management 6.8 portal, the ERM module in Siebel 7 is better, FleetBoston executive VP Dean Athanasia says. "It provides tighter integration between Siebel and non-Siebel applications," says Athanasia, who plans to integrate document and content management, news, company reports, and customer information into the portal.

Siebel's thin-client architecture alone may encourage customers to buy in. Had version 7 been available sooner, Siebel might have won business from MedSolutions, a radiology-management company in Franklin, Tenn. CEO Kirt Thorne was set to buy Siebel until he saw PeopleSoft 8. "The architecture was the most important thing for us," he says. "We were so excited because we felt this was something we could manage and make work."

Never Miss a Beat: Get a snapshot of the issues affecting the IT industry straight to your inbox.

You May Also Like

More Insights