Siebel's Makeover - InformationWeek

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Software // Enterprise Applications
06:00 PM
Darrell Dunn
Darrell Dunn

Siebel's Makeover

The once high-flying company re-establishes itself in the wake of weakened revenue

Siebel Systems Inc. recently decided to show Saeed Hosseiniyar, VP of IT for Alcatel's e-Business Networking Division, how to get more insight into the buying patterns and service requests of the company's 16,000 customers. Siebel provides the division's 1,500 employees with software for call-center operations and sales-force automation, but Hosseiniyar told Siebel there was very little chance the company would have the budget right now to invest in its analytics technology and services.

The old Siebel--the one that "bullied its way into a leadership position with outstanding technology and an aggressive but polished sales force," according to ISM Inc. analyst Barton Goldenberg--might not have been so ready to act on such a tentative project commitment. But a decade after becoming the driving force in defining and creating the customer-relationship-management software market, the company is faced with re-establishing a once remarkable success story diminished by eight quarters of revenue erosion amid an industry downturn, plagued by widespread debate over failed CRM implementations, and challenged by increased competition.

Despite these obstacles, Siebel is determined to reassert itself. Last week, at its user conference in San Diego, Siebel promised to take steps to reach new buyers who want to spend less on software and maintenance and more quickly realize value from their deployments, as well as make deployments for all users more relevant to their specific business issues.

Siebel founder, chairman, and CEO Tom Siebel

Siebel's CRM On Demand offering will be profitable next year, founder Siebel says

Photo courtesy of Bloomberg News
"This is a new era for CRM," founder, chairman, and CEO Tom Siebel told conference attendees during his keynote address. "We must provide the hybrid solutions that meet the requirements of a distributed business model. CRM today means very different things to people in different industries." Siebel told customers that the company is aiming at helping its customers meet business needs with both industry- and task-specific modules, and by offering new licensing models that don't require large, up-front investments.

Clearly, Siebel is revisiting the idea that it was selling to a market that was smart about how CRM software worked and that would know how to deploy it successfully. As it expands its expertise into business analytics and application integration--and even tries hosting again--it seems the world's leading CRM vendor is looking more closely at what it really means to be a customer-centric company to its 4,000 clients. "There are only two places left where you can create a sustainable, long-term competitive advantage: in your relationship with your customer and within the culture of your own company," says Peter McCullagh, head of Siebel's CRM Strategy Group.

Hosseiniyar has seen the fruits of this focus. Siebel in August brought in consultants from the group, who spent several weeks creating a pilot analytics program. "It was fantastic, but we just didn't have the budget" to deploy it, Hosseiniyar says. He invested very little money in the pilot but says the consultants were gracious about removing the system and are ready to deploy it anytime.

The CRM Strategy Group was formed with eight employees in March 2001, just as the company was beginning to experience a drop-off in revenue. Now the group has 40 employees who so far have trained 1,000 Siebel personnel to work closely with senior management at 175 customer sites, and it's working toward training all employees who have any customer contact. The goal is to help companies that are committed to working with the vendor establish expected benefits at the outset, generate additional benefits post-deployment through process changes, and track results. Typically, they'll spend three to four months with a customer after a deployment.

Understanding that it has to take a leadership role in implementations has been a big part of the culture change at Siebel. "I do think there is change going on," says Brad Reback, an analyst with CIBC World Markets. "Given the issues they've had, and some failed implementations, there's no doubt that they need to show increased TLC to customers."

Siebel's Strategy Group recently completed a six-week on-site evaluation for longtime customer Quick & Reilly Inc. The goal was to get employees more adept at making the Siebel software an integral part of the process of doing business, says Ed Garry, VP of CRM solutions for the financial-services company. "The challenge of implementing [Siebel] software is not in taking it out of the box, configuring it, and getting it to run," Garry says. "The challenge is getting the call-center agent or financial consultant to understand why the software is important, why it builds relationships, and why it will help bottom-line revenues."

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