Big Changes Ahead For Siebel SystemsBig Changes Ahead For Siebel Systems

CRM customers will be listening this week when Mike Lawrie takes the stage at the Siebel Systems Inc.'s user conference in Los Angeles for his first public appearance as CEO of the customer-relationship-management software pioneer. The conference represents a crucial moment for leader and company alike.

For Lawrie, it's his first chance to put his stamp on a company that has long reflected its enigmatic founder and chairman, Tom Siebel, who stepped down as CEO in May. For Siebel the company, it's an opportunity to put to rest concerns that it's wilting under the pressure of unprecedented competition after a rough second quarter in which its revenue came up more than $50 million short of expectations and software license revenue hit a five-year low. "They need some serious change, and they need it fast," says Josh Greenbaum, an analyst with Enterprise Applications Consulting.

No one understands that more than Lawrie. "There is no question we have to do many things differently," he said in an E-mail message. That's translating into focusing more on on-demand offerings and the small- and midsize-business market, continuing to roll out products customized for specific vertical markets, and offering customers more in terms of analytics and data integration (see box).

Competitors, meanwhile, smell blood. Salesforce.com Inc. introduced last week Supportforce.com, a Web site that integrates the company's existing customer-service functionality with IP-based telephony systems from vendors such as Avaya Inc. and Cisco Systems. Yankee Group analyst Sheryl Kingstone characterizes that move as "a direct hit against Siebel On Demand," because it addresses a competitive advantage Siebel had enjoyed by offering integration of the customer-service and computer-telephony capabilities in its Contact On Demand service with its CRM On Demand product.

Supportforce has improved the integration of PC system software maker Phoenix Technologies Ltd.'s customer-service information and presale leads, resulting in the sales and field engineering staffs being more informed about the business. "That makes my job easy, and I like simplicity," CIO Cliff Bell says.

To compete more effectively with Salesforce and Siebel, hosted CRM vendor RightNow Technologies Inc. will introduce this week its first sales and marketing offerings to complement its core Web-based customer-service suite.

But pressure on Siebel isn't coming from on-demand vendors alone. AMR Research predicts SAP will take over the leadership position in the CRM market by the end of the year--something Siebel and other CRM vendors dispute, contending that much of SAP's CRM revenue comes from selling software bundles that include mySAP CRM, even if customers don't use the CRM functionality. But AMR's numbers also show Oracle and PeopleSoft Inc. closing in on Siebel as big customers look to software infrastructure vendors to provide a larger range of applications. That has fed analyst speculation that Siebel could be gobbled up by Microsoft or IBM.

None of the uncertainty around Siebel has created angst for Patrik Riese, director of CRM for General Motors Corp.'s unit Saab Cars USA, which has been live for nearly three years on a multimillion-dollar deployment of Siebel 2000--the last version before the vendor's switch to Siebel 7 with its Web-based interface. "As a customer, as long as the stuff on the ground is still working--you still have your contact, you still have your support when you need it," he says. "It really doesn't matter if there's a bad quarter or there's a new CEO."