LOS ANGELES -- CRM market leader Siebel Systems Inc. is targeting the midmarket with a two-pronged approach that attempts to deliver the functionality of its enterprise products with less complexity.
The San Mateo, Calif.-based applications vendor has its sights set squarely on the high end of the midmarket, where companies are hungry for powerful automation applications but lack the IT budgets of Fortune 500 customers. In the growing midmarket, Siebel primarily competes with software makers that target that sector exclusively.
According to Siebel midmarket executives at Siebel's annual user conference this week, the key to the company's strategy lies in offering products that can be expanded over time but which come designed for rapid deployment. Rich Reimer, director of product marketing at Siebel, said there are more similarities between enterprise customers and small to medium-sized business (SMB) users than many industry watchers believe.
"The long-term goal of these organizations is often as mature as with top-level CRM customers," he said. "The biggest difference is the level of allocated resources in terms of staff, training and customization."
Siebel currently offers two versions of its Siebel 7 midmarket CRM software: Enterprise Edition and MidMarket Edition. Both packages include applications for sales, service, partner management and e-commerce. The most significant difference between the two offerings lies in their expandability and customization features, Reimer said.
One area in which Siebel's midmarket approach differs from its enterprise operations is in sales strategy; for its midmarket products, the company utilizes channel partners rather than selling to customers directly. Reimer noted that different resellers often market one or the other of Siebel's midmarket products.
Siebel identifies the SMB customers as those with less than 1,000 users, while recognizing that Siebel's products target organizations of varying size, depending on vertical industry. For both packages, pricing is based on the number of users.
Analysts have said that the midmarket remains the CRM sweet spot because so many enterprise-sized businesses have already installed CRM software.
Karen Smith, research director at Boston-based Aberdeen Group Inc., said that the sizable investments necessary for training and deployment remain roadblocks to midmarket success for Siebel.
"They haven't seen much success yet," Smith said. "There are other vendors that focus solely on the sector that remain more appealing for customers."
Smith said that other application makers, including the SalesLogix division of Irvine, Calif.-based Best Software Inc., have a firmer grip on buying dollars. She believes that Onyx Software Corp. in Bellevue, Wash., also controls significant mind-share in the space but thinks the firm took a step backward in trying to market itself as an enterprise player in the past.
"For Siebel to succeed it will need not only [for its products] to deploy more easily, but it will also have to provide for more ability to engage the user," she said.
Looking forward, Smith predicted that Siebel would also soon begin competing against Microsoft Corp.'s midmarket CRM offering in some circumstances, although Microsoft is initially targeting a lower end of the sector. Smith foresees a time when Microsoft will move upstream to challenge Siebel and its competitors for the high-end midmarket.
"Nothing is guaranteed, since [Microsoft] hasn't even delivered its product yet," Smith said. "However, if they can build the sort of functionality they've talked about, I suspect they will move up and compete."
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