Addressing TCO: Suite Lowers Cost Of CRM DeploymentsAddressing TCO: Suite Lowers Cost Of CRM Deployments

Tom Siebel last week said that with the release of Siebel's 7.7 CRM suite, he'd hoped to achieve a 50% reduction in total cost of ownership over version 7. He came up a bit short--the new software, he says, will reduce TCO by 39% over the earlier version--but it's a welcome development, all the same.

TCO has long been a troublesome problem for Siebel, says Barton Goldenberg, an analyst with ISM Inc. "The long-standing joke in the industry was that Siebel software might cost a buck, but the multiplier was another $1 to $2.50, so the real cost of implementation was $3.50," he says. "They had to step back and make sure they were doing a good job."

Siebel has targeted eight areas for TCO reductions: installation, configuration, operations, upgrades, performance, usability, testing, and integration. The company made its first major TCO push with Siebel 7.5.3, which it says provided a 17% reduction compared with Siebel 7. Factors driving the push to TCO include economic pressures forcing IT departments to watch budgets closely and "the growth of deployments in excess of 10,000 concurrent users," says Skip Bacon, Siebel's VP of technology.

Making software manageable at that level is a whole new ball game, he says. Bacon says Siebel will spend 70% of its research and development budget this year on enhancements and features that drive down TCO.

About a year ago, Siebel sent out "SWAT teams" to about two dozen customers to help it create specific TCO improvements. Examples include a rapid configuration program that compresses into one step tasks that previously took five to six steps and had to be repeated 10 to 40 times. The company also automated the movement of configured data from development to test and then to production, by creating tools to validate software environments. To improve user productivity, Siebel 7.7 also will introduce a user interface with guided navigation appropriate to a user's role in the organization.

Siebel in the last few years also has expanded its own implementation efforts in conjunction with partners or as the prime or sole contractor on projects, where, Bacon says, "its skills sets are comparable or better, and we are in the same ballpark on pricing."

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