At first, the fact that Siebel has formed strategic alliances with Microsoft Corp. and IBM Corp.
looks like a giant case of having one's cake and eating it, too. After all, by running its suite of
CRM applications natively on both the .NET and J2EE platforms, the San Mateo, Calif.-based CRM
leader avoids having to make a commitment one way or the other until it's more clear who's likely
to win the platform wars.
"Part of the deal here is that Siebel is straddling the fence with respect to a platform decision,"
said Steve Bonadio, a senior director at Meta Group, a research company based in Stamford,
Conn.
But this is more than a holding-pattern type of decision. Siebel is crafting a survival strategy
that embraces open systems at the expense of its proprietary application server, which, according
to Jeff Scheel, vice president of CRM products at Siebel, will be phased out in about three years.
Siebel, along with IBM and Microsoft, is putting serious money behind its strategy: Scheel says
that the company plans to spend nearly $600 million on .NET and J2EE initiatives during the next
three years.
Doug Smith, the vice president of architecture at Siebel, says that the company is choosing the
vendor-neutral route because it's clear that large companies won't choose one platform or the
other. "We're seeing that a majority of our customers are going to have both technologies
in-house," he said.
In other words,
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Siebel's choosing one platform would have forced an unwanted choice on its
customers -- an undesirable circumstance, indeed."We were very excited to see that Siebel will continue to equally support the J2EE platform, because we've already built all our integration around J2EE," said Joe Oesterling, the CIO of Cbeyond Communications Inc., a telecommunications company in Atlanta and a Siebel customer. "We were a little fearful that they'd jump to .NET, and who wants to switch when something works already?"
Joshua Greenbaum, a principal at Enterprise Applications Consulting in Daly City, Calif., points out that, by making its tools available on both platforms, Siebel could in effect ease infighting between line of business (LOB) technology purchasers and CIOs. "A lot of companies make infrastructure decisions at the CIO level but enterprise applications-buying decisions at the LOB level," he said. "It's not uncommon to find that the LOB guy wants an application that doesn't run on the infrastructure that the CIO has mandated. This kind of strategy nullifies that argument."
The dual-platform strategy should also ease integration issues for many companies, particularly in the vertical industries so strongly targeted by Siebel. "That's where integration becomes important," said Chris Selland, the president of Reservoir Partners Inc., a CRM consulting firm in Cambridge, Mass. "The more vertical you get, the more integration matters." Financial services companies, for example, must tie together a raft of different systems, from trading to compliance systems.
Moreover, IBM and Siebel have historically had a good relationship -- IBM Global Services is a Siebel partner, for example. And IBM is very strong in certain vertical industries, such as financial services and insurance. In fact, Scheel says that one of the first applications to be rolled out by Siebel will be for retail banking; he expects it to be available by the end of the year.
"That will really help Siebel," Bonadio said. "The IBM relationship has more to offer long-term, and to end users in certain industries. Microsoft doesn't know how to solution-sell and doesn't have the capacity of IBM Global Services."
Despite that fact, the alliance is certainly a shot in the arm for Microsoft, since Siebel remains one of the only large enterprise application vendors to support .NET, although SAP did recently announce that its NetWeaver will support both environments. "The vast majority of the enterprise application providers, such as JD Edwards and Oracle, are going down the J2EE path, and Microsoft sees a threat there," Bonadio said.
"Microsoft really needs to get Siebel-class endorsements," agreed Greenbaum. "The .NET legacy starts in the small-to-midsize market, but that's not where Microsoft wants it to be. They want Fortune 1000 territory, and that's why they're courting folks like Siebel."
Meanwhile, the fact that Microsoft has a CRM application of its own means that the two partners could quickly turn into competitors. Smith dismisses the issue, saying that Microsoft's application plays in the small-to-midsized market, while Siebel's products are more for behemoth companies.
"It'll be interesting to see how long the commitment to Microsoft continues, especially while Microsoft continues to develop CRM applications," Bonadio said. "They won't be a competitor at the high end, but there could be friction between the two at the mid-tier end of the market."
In the end, Bonadio says, Siebel's strategy decisions have been smart ones, but he cautions that the inevitable migration from current Siebel versions to the new standards-based flavors could prove harrowing.
"Users need to monitor this and work to understand the implications of this architecture change," he says. "They need to understand how much money this is going to cost two or three years down the road, when they are faced with another decision to upgrade."
This was first published in April 2003