Will the Real Siebel Please Stand Up?

Trying to make the disjointed pieces of Siebel’s product strategy fit together is comparable to deconstructing a kaleidoscope and trying to create a mosaic from the pieces of randomly shaped colored glass. You’ll get a colorful picture that’s more abstract art than realism.

The core of Siebel’s challenge is to make all of its applications, processes, investments in infrastructure including Universal Application Network (UAN), and adoption of the hosted model make sense in the real world of customers. Right now, the total picture is so abstract and esoteric that only the most conceptual thinkers fully understand it.

You can’t fault Siebel for trumpeting its strengths in analytics, its world leadership in partner relationship management or the impressive revenue generated by its call-center application sales. Yet you can fault it for the confusion about where all these diverse efforts lead. Uncertainty about how they fit together adds up to a road map for the future that is cloudy from an enterprise standpoint, though clear for those applications fortunate enough to have widespread support throughout Siebel’s more than 20 internal vertical marketing organizations.

Analytics Is Siebel’s Oxygen

First, the good: Analytics applications are experiencing over 200 percent revenue growth at Siebel today. It’s no surprise why this is happening: The company’s customers are craving hard numbers regarding performance of their marketing, sales and service strategies. The depth of these applications is world-class, and their ability to simplify complex statistical routines, including factor analysis, is impressive. Consumer-products companies are snapping up analytics applications to further segment their prospect and customer browsing and buying behavior. These applications are also fortunate internally, as the majority of Siebel’s vertical marketing teams are selling them.

With all the momentum around analytics, it’s easy to see how Siebel five years from now could be transformed into an analytics vendor. Analytics is quickly on its way to becoming the glue that holds together the company’s product strategy.

Siebel Order Management Needs To Go Pro

On the other hand, Siebel’s order management efforts are not yet on the level of its analytics. The company’s first efforts in this area were really order capture in call centers. In the last three years, Siebel has relabeled the applications Customer Order Management, which is more accurate, as order management conjures up images of supply chain, warehouse management systems, and the core of complex ERP systems in the minds of many CIOs. 2003 was the year of quote-to-order as more companies asked for guidance in this area than any other. Siebel responded with the development of Siebel Quote and Order Lifecycle Management, which was a good move. Add in Pricing Management and the evolving Product and Catalog Management, and Siebel seems to be getting its order management act together.

However, one fact reverberates through every conversation I have had about order management with any senior-level executive, regardless of title: No one wants to trust their order management systems to someone not in that core business. The likes of Yantra, Comergent, Oracle, SAP and others are proving that point with the deals they are winning right now in this space.

Will Customer Order Management be successful at Siebel? Yes, provided it can get past being seen as just another CRM-like stab at a messy problem many companies have that also happens to involve their main source of revenue. Siebel will need to go pro here and show it can truly be an enterprise player in order management, not an add-on to existing CRM applications in already-won accounts.

Turning Customer-Facing Processes into Profits

Another in-progress area is UAN. About two years ago, Siebel had all the industry analysts in to show them its integration strategies around UAN and the latest applications. The company executed well at the event and unveiled a published document the size of the Manhattan White Pages that detailed best practices in customer-facing processes.

However, in doing so, Siebel impressed the conceptual thinkers but alienated the most pragmatic IT directors and CIOs I’ve since spoken to about this effort. One IT director told me that he wasn’t about to spend US$1 million for “a series of connectors and a bucketful of PowerPoint slides and some system integrator looking to make a quick buck.”

UAN is not all about PowerPoint. It’s a series of adapters that enable Siebel applications to interconnect with many different types of data repositories, making it possible to inject intelligence into sales, marketing and service strategies. Unfortunately, the great big book of best practices stole the show at the event and has since created confusion instead of showing why UAN matters.

It’s been a lot of work, but Siebel finally is getting to the truth about UAN, and companies are starting to invest.

The Land Grab Also Known as Hosted Applications

Meanwhile, amid the recent trend toward hosted CRM applications, Siebel has become the poster child for companies that rely on license-based pricing for in-house software yet are allured by the annuity revenue streams the hosted model provides. Tempted by the customer ramp potential yet constrained by costs associated with license revenue, Siebel faces its most serious challenge here. Recent acquisitions the company has made in this area and its much-publicized IBM OnDemand relationship seem to underscore the fact that the hosted-CRM market push is mainly about customer acquisition and minimizing churn. It’s a CRM land grab, pure and simple.

Does it make sense to consider using Siebel OnDemand? Yes, because the applications reflect lessons learned in usability, and the functions are what businesses need. The bigger question is what OnDemand will do to sales of enterprise applications and how the OnDemand platform will serve as part of the broader Siebel product strategy.

Tough Competition

The competition will not be easy. Lack of integration has long been a major criticism leveled against hosted applications. In promoting its own offerings, Siebel has contended that salesforce.com is not an enterprise application due to its lack of support for integration. Yet with sforce, this alleged lack of integration is now gone. Sforce gives salesforce.com the necessary platform to integrate with back-end systems just as licensed applications do.

Even so, despite strong competition from salesforce.com, Siebel has a new CEO, fresh from IBM with strong sales experience, who no doubt will champion the OnDemand initiative and other shared projects.

Five years from today, Siebel could be the world leader in hosted-CRM applications. The flip side of that leadership would be a company so different from its present incarnation that it is unrecognizable by today’s standards.

Tying It All Together

So, what does this mean in big-picture terms?

Siebel is on its way to becoming what companies are driving all CRM vendors to be: accountable for short-term, measurable results that minimize IT dollars and time while helping a company achieve its business goals. The challenge for Siebel is to take its kaleidoscope of applications and align them not with each other, but with the urgent needs of clients. That is going to involve an organic change at this company.

The bottom line is that the real Siebel will be one that has no choice but to align with how companies think today, and that’s all about short-term results — getting sales, marketing, service and support strategies accomplished quickly. No one has the time or luxury anymore to go off on a theoretical tangent about what multimillion-dollar investments in software mean. They mean nothing unless they deliver results.