Siebel's transition year

From a new market focus to new products to a new CEO, it was a year of change for CRM pioneer Siebel Systems.

No one can accuse Siebel Systems Inc. of standing still.

For the San Mateo, Calif.-based company, 2004 proved to be a year of massive changes.

The company's self-described Chapter 2 began with founder Tom Siebel's May resignation as CEO. While remaining as president, Siebel turned the company over to IBM executive Mike Lawrie, the man who steered IBM through the largest deployment of Siebel.

Siebel's tumultuous year

Acquires hosted telephony firm Ineto

Tom Siebel steps down as CEO

Ships version 7.7

Study says SAP to take over top spot

Announces hosted verticals

Experiences a tough summer

Lawrie appears at User Week

Extends analytics

Announces Customer Blueprint Program

Launches SMB initiative

"The change in leadership, the transition is definitely the biggest story," said Chris Selland, vice president of sell-side research with Boston-based Aberdeen Group Inc. "And I think it was the right move. Tom was the right guy to drive the company from zero to where they got to. Mike is definitely more the leadership type to transform the company."

Yet while Tom Siebel's resignation as CEO might be the biggest story for the industry and for Siebel, the decision to target the small and medium-sized business (SMB) market was a more important step, according to Denis Pombriant, managing principal of the Stoughton, Mass.-based Beagle Research Group.

"The real key isn't what's on the scoreboard, it's how you've positioned yourself for the years ahead," Pombriant said.

And with the SMB market widely regarded as a key area for growth, Siebel is opening new channel partnerships and is deploying an SMB sales force, leaving the company well positioned, Pombriant said. Siebel's hosted OnDemand product has seen traction with companies with less than $35 million in revenue, according to Siebel executives.

"It's the greenfield in the market," Selland agreed. "[Enterprise CRM vendors] have all taken passes at getting into SMB. None have been successful. Building a channel is the right thing to do."

One aspect of Siebel's SMB push is to take the complexity out of choosing and deploying CRM software. A similar theme was struck at Siebel's User Week conference in October when the company announced its Customer Blueprint Program, a Web-based tool with resources such as sample project plans and white papers to help customers share best practices.

"They're sensing, and correctly, that the market's moving to a new level of maturity," Selland said. "Organizations don't want massive, difficult implementations. It's something the whole enterprise software business has been guilty of. They need to transform into being that kind of company. I wouldn't say 2004 was the year they accomplished that goal."

Not all of Siebel's achievements have focused on Tom Siebel's departure and the SMB announcement. Siebel did release version 7.7 of its application this year and announced some major analytics initiatives. Analytics will continue to drive CRM, and Siebel has been successful in the business intelligence arena since the acquisition of nQuire, Pombriant said. But the usability enhancements in 7.7 are something Siebel has been struggling with since version 6, he added. Additionally, product enhancements don't seem to matter as much as they did in 1999, Selland said.

Siebel is also seeing a stronger challenge, not only from upstarts like Salesforce.com, but by Germany's SAP AG. An AMR report predicts that SAP will become the market leader in terms of revenue next year.

"I wouldn't say it was a bad year, I'd say it's a transitional year and the fruits will come down the road," Selland said. "Last week I heard all the right things. Now it's a matter of accomplishing that."

FOR MORE INFORMATION:

Read about Siebel's SMB initiative

See coverage of Mike Lawrie's first public appearance

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