Siebel Systems Inc.

Customer Relationship Management (CRM)

IBM 6222

Dr. Murthi

Case Study

Spring 2001

Niel Chaubal

Emily McKee

Sumit Singh

Patrick Toma

Table of Contents

I.     Background Information

II.    Company Overview

III.   Industry Recognition

IV.   Strategic Alliances

V.    The CRM Landscape

VI.   Market Analysis

VII.  Financial Performance

VIII. Competitive Landscape

VIIII. Future Outlook

X.    Strategic Analysis

XI.   Strategic Marketing and Business Model

XII.  Recommendations

XIII. References: 

    Exhibit I      Valuation ratios

   Exhibit II      Financial ratio analysis 

   Exhibit III     Geographical revenue distribution  

   Exhibit IV    Siebel Product Review  

    Exhibit V    Market Shares across Product Categories

Background Information

Thomas Siebel – CEO Siebel Systems Inc., the leading designer and developer of CRM software was worried. The recent economic downturn had led him to believe that they were heading towards a global recession. Although Siebel emerged as one of the largest Silicon Valley companies to deliver a pleasant surprise by reporting better-than-expected first-quarter profits this year, they decided to brace themselves for tough times ahead by laying off 10 percent of its work force. Tom Siebel grimly predicted that the recession would wipe out business-to-business exchanges and software vendors.

Siebel had earned $76.9 million, or 15 cents per share, for the three months ended in March 2001, versus a loss of $41.7 million, or 10 cents per share, the same time last year. Siebel's first quarter revenues totaled $588.7 million, up 84 percent from last year and better than the stock market's revenue projection of $573 million. Tom Siebel was concerned that his growing business would be adversely affected by the impeding economic recession and that he would not be able to deliver second quarter expectations. Earlier that day, he had announced plans to shut down Siebel’s web-based sales force automation service as of 30 June 2001, after a failed bid to spin it off as a separate company.

Back to Table of Contents

Company Overview:

Founded in 1993 by former Oracle Corporation executive Tom Siebel, Siebel has emerged as one of the world's leading providers of eBusiness application software with more than 3,500 employees who operate in 37 countries and 130 offices around the world. The company's growth stemmed from the popularity of its customer relationship management, or CRM, software that is designed to help businesses automate their marketing and product services and do a better job without raising expenses. Demand for the software has been steadily growing and, as the dominant provider of the software, Siebel has flourished. The company earned $322.5 million on revenues of $1.8 billion last year. Although Siebel remains the leader for CRM software, it has been facing increasing competition from several rivals, including San Francisco-based salesforce.com, an online service run by entrepreneur Marc Benioff, an early investor in Siebel.

Siebel Systems (www.Siebel.com.) is a provider of eBusiness applications and an integrated family of Web-based sales, marketing and customer service applications that help organizations build and manage relationships with their customers around the world. Siebel eBusiness Applications are designed to meet the needs of small, medium and large businesses. Organizations using Siebel application software can service their customers across multiple channels, including the Web, call centers, resellers, retail, and dealer networks.

Their applications are available in industry-specific versions designed for the pharmaceutical, healthcare, consumer goods, telecommunications, insurance, energy, apparel and footwear, automotive, technology, public sector, and finance markets. The Company's products are available with similar functionality, but each specifically designed for a particular industry. Examples of industry applications include Siebel eFinance, Siebel eInsurance, Siebel eCommunications, Siebel ePharma, Siebel eConsumer Goods, and Siebel eEnergy. [Refer Exhibit IV]

The Company markets its products in the United States through its direct sales force and internationally through its sales force and distributors, primarily in Japan, Latin America, South Africa and Asia. International revenues accounted for 31%, 30% and 27% of license revenues in 1999, 1998 and 1997, respectively. Siebel's revenues from selling software (license fee revenue) in the first quarter of this year reached $335 million, up 71% from year-ago numbers. Revenue from maintenance, consulting and other services was $253.6 million, up 104%.

The Company's major competitors include Allegis, Annuncio, Ariba, Baan Co., Blue Martini, Brightware, BroadVision, Broadbase Info, Calico Commerce, Callidus Software, Inc., CAS GmbH, Chordiant Software, Clarify, Dendrite International, Epicor, E.piphany, FirePond, Firstwave Technologies, GoldMine Software, I2 Technologies, Kana Communications, MarketFirst, MarketSoft, Niku, Octane Software, ONYX Software, Oracle, Pegasystems, Inc., and Pivotal Software, Inc.

Back to Table of Contents

Industry Recognition:

Siebel Systems has been recognized throughout the industry for its business and technology success in 1999:

Fortune Magazine named Siebel Systems first among the "100 Fastest Growing Companies."

Business Week named Thomas M. Siebel, Chairman and CEO, among the "Top 25 Executives of the Year."

InformationWeek named Siebel Systems eBusiness Application suite, Siebel 99, among the "Ten Most Important Products of 1999."

Intelligent Enterprise Magazine named Siebel Systems the most influential company shaping the "intelligent enterprise."

Siebel Systems topped the list of the fastest growing technology companies in the United States in the "1999 Deloitte & Touché Technology Fast 500," breaking records with a five-year revenue growth of 782,978 percent.

Back to Table of Contents

Strategic Alliances:

One of Siebel’s greatest competitive strength is its ability to develop and maintain long-term strategic alliances with some of the most important high tech companies in the world. Siebel has hundreds of alliance partners spanning its entire product, geographic and vertical markets. Its most important strategic alliances, however, are with systems integrators, software & hardware, and platform providers, and are listed in the following table:

A major factor in Siebel’s early rise as a dominant player in the sales force automation market was its alliance with Andersen Consulting ( now Accenture ), in which Andersen promoted Siebel as the preferred choice to its major accounts around the world. Now, every major systems integrator has a practice centered on Siebel’s software.

At the end of 1999, Siebel entered into a strategic R&D, sales and marketing alliance with IBM. In the first two quarters after the agreement the two companies signed over 100 joint customers.

Siebel also has reseller agreements with ERP vendors including J.D Edwards, Great Plains and Lawson Software, which enable them to penetrate the low and middle segments of the market. Due to its dominant market share position, Siebel has become very attractive as a strategic partner because it can drive a significant amount of revenue to any company they partner with.

Other recent alliances include:

Ceyoniq AG , a producer of systems for integrated document management and archiving. The interface enables real-time, direct access from the user interface of Siebel eBusiness Applications to documents on the Ceyoniq Server. The combined service enables customer-facing employees to access all relevant information concerning specific customers directly from the Siebel Systems user interface.

Comverse Infosys Inc., a provider of business intelligence through digital voice, data and video recording for contact centers, government, law enforcement and other commercial applications, announced validation of the integration of its ULTRA Intelligent Recording system with Siebel eBusiness Applications.

Ubizen, a provider of e-security services, joined the Siebel Alliance Program as a Premier Software Partner. Ubizen's MultiSecure, a family of application security products that provide secure transactions and Web portal access control, will complement Siebel e-Business Applications.

Lucent Technologies and Siebel teamed to integrate Lucent's Arbor/BP billing platform and Arbor/OM order-management software with Siebel eCommunications, the combined system will open new revenue streams for service providers and improve their profitability through targeted marketing activities and improved customer care. As part of the agreement, Lucent joins Siebel's alliance program as a premier software partner.

Siebel Systems, Inc. and Alcatel, a builder of next generation networks, announced an alliance to integrate and market eBusiness solutions for mid-market and heterogeneous enterprise contact centers. Alcatel's Genesys subsidiary and Siebel will develop integrated voice and Internet contact center solutions for mid-market contact centers. The offering is planned to be generally available in fall 2001. The companies will also collaborate to develop an integrated solution for enterprise contact centers. The enterprise integration solution is planned for general availability in summer 2001.

Portal Software, Inc. recently joined the Siebel Systems, Inc. Alliance Program, to work together to provide a joint solution. As part of the alliance, the companies plan to bridge Portal Infranet with Siebel eCommunications 2000. When complete, the combined offering will enable a comprehensive eBusiness and billing solution to help communications service providers improve customer satisfaction through real-time customer billing account management.

Back to Table of Contents

The CRM Landscape:

Siebel did not invent CRM; in fact, it's a relative latecomer. But its Siebel 99 application suite, which added marketing and E-commerce capabilities this year, made CRM possible on a broader scale, spanning sales, customer service, and marketing with scores of application modules. The industry has the potential to grow into a multi-billion dollar business in a few years.

CRM or Customer Relationship Management is one of the fastest growing areas in business today. In the past, though companies interfaced with customers, their focus was to sell products and services as opposed to focusing on managing customer relations and retention. However, the Internet and the globalization of business, have changed the rules of the game. Customers now have a variety of choices and are in control, they have become more knowledgeable and demanding.  With the changed scenario, most companies have begun to realize that they need to treat their customers with more care. They are now desperately searching for different ways to manage customer relationships effectively, means to acquire new customers, and also to retain existing ones.

CRM can definitely be used as an effective business strategy for growth. It provides an integrated view of a company’s customers to everyone in the organization so that the customer can be serviced effectively. For example, if marketing runs a campaign, all the information about the customers and the program should be retained for the sales people to follow up, the customer service people to answer any queries, and technical support to provide any field support. The idea is to have the same information shareable with all in the company. This will enable the company to present a uniform face to its customers when called upon to serve their needs. Such a CRM strategy also implies that the enterprise is customer-centric.

Hence, CRM enables a company to differentiate itself from its competitors by providing superior customer satisfaction. The first step in achieving this differentiation from competitors is the creation of in-depth customer profiles. The proliferation of delivery channels has actually given organizations more opportunities to develop useful, actionable information. Once those profiles are functional, companies have to make sure that the interactions with a customer are specific, or in keeping with the individual customer's preferences.

A CRM initiative needs an in-house customer data warehouse, which can process and analyze data from its customers - information such as age, marital status, children, subscriptions, type of car - to customer profitability and what delivery channels they use. This information then can form the analytical framework the company can use to develop its marketing strategies, product launch plans, cross-sell ideas, retention and attrition rates, and customer acquisition strategies. Companies may have numerous products that could be sold to their customer base, but they can now prioritize products based on what they understand about their customers. The system can signal potential problem areas and quick steps can be initiated to stem the potential loss and salvage the relationship.

CRM strategy can also revolve around the segmentation of its customer base, as different segments of the marketplace require different sales and marketing plans. CRM strategy revolves around the customer life cycle, which falls into three segments: a period of acquiring relationships, enhancing and deepening relationships, and retaining customers. Deeper customer relationships are not only more profitable, but are easier to retain. An integral part of CRM is evaluating the results. The value of an enterprise is the future value of its customer income streams.

But evaluating the success of a CRM initiative, even with meticulous data, is sometimes difficult, even when the measurement is straightforward, like counting more customers who are buying a certain product, there are things one can't link directly to bottom line but think generally have some impact on the bottom line. Customer data can be used to create customer profiles and segments to pitch products and create broader marketing campaigns. The value is understanding not only how a customer is using their account, but how a customer is using the organization. Siebel's CRM technology generated one of the best analytics in the industry, which in turn allows companies to do predictive modeling and develop campaigns based on that information. Siebel eBusiness Applications create a single source of customer information and enhance the company's ability to sell to and satisfy customers through multiple sales channels, including the Internet, phone, face to face, fax and post.

Back to Table of Contents

Market Analysis:

Information is the lifeblood of today's modern organization — the right information delivered in a timely manner often results in a competitive advantage. But in the past few years and particularly in 2000, IT spending has slowed. At the same time, there was a steady shift from a business-legacy process to a rapid-return investment focus. The trend has evidently moved toward investment in customer-relationship management (CRM), and supply-chain management (SCM). Gartner Dataquest has predicted that CRM and SCM applications will continue to grow at rates above 25% to 35% year-over-year and they have projected $76.3-billion to be the CRM market for 2004.

Back-office enterprise resource planning (ERP) systems realized negative growth during 1999, but recovered last year with a net growth of 23% over three years. Today the CRM market is more than half of the ERP market, up from 15% just three years ago. Companies are spending their IT budgets on areas with a more immediate impact on their bottom line - a short-term return on investment (ROI). Increasingly budgets are being aimed at operational cost cuts, customer retention and acquisition efforts.

The trend has become more pronounced in the past few months - when the economic downturn became evident, since CRM and SCM software increases a company's flexibility by allowing more control over the functions that directly affect its supply-and-demand requirements. Hence, all non-critical spending, which does not directly increase revenue or decrease costs significantly will cease. Areas that have the most potential for growth would be CRM customer-interface systems.

CRM software, in a latest survey of 100 companies, got mediocre reviews because projects turned out to be more complex than buyers had originally thought; most buyers tend to underestimate the lengthy time of integration.

Back to Table of Contents

Financial Performance:

Siebel’s strong management and market position have led to a financial performance that continues to exceed expectations. Total sales revenues grew by 95% in 1999 and 121% in 2000. Software license revenues grew at 118% in 2000 and revenues from professional services grew at 125%. The company continues to diversify its revenue streams by expanding internationally. In 1998 international license revenues represented 30% of total license revenues, and by 2000 this had grown to 40%. Siebel generated around 75% of its revenues from its three big verticals: financial services, technology and telecom. Siebel stated that its recently formed government business unit could become one of the top revenue producers in the next few years. Siebel also generated approximately 54% of license revenues from existing customers and 46% from new customers, which is an indication of a strong installed base of customers as well as growth in new business.

Siebel ended the year with a strong balance sheet. The company ended the year with $751 million in cash and cash equivalents, up from $486 million in 1999. The company ended the year with $300 million in long-term debt, equal to approximately 14% of its total capitalization.

[See Exhibits I, II and III for recent valuation and key management ratios]

Back to Table of Contents

Competitive Landscape:

Siebel faces competition from both new entrants and established companies, as well as its potential customers in-house development efforts. What follows is a discussion of major competitors in this market.

ERP vendors such as Oracle and the merged PeopleSoft/Vantive are moving aggressively into CRM, promoting integration with their back-office applications, which could spell trouble for Siebel down the road. PeopleSoft Inc. has plans to release its PeopleSoft8 CRM product later this quarter. Oracle's revenues have traditionally been based on database products, but the company has sought to become a suite provider in recent years, offering everything from CRM to supply chain management software. Microsoft's decision to buy an e-business applications maker (Great Plains) is a fairly strategic change, Great Plains seems strongest in accounting and manufacturing software, so a future purchase in customer-relationship management or supply chain software would make sense. 

Clarify

Clarify was acquired at the end of 1999 by Nortel Networks. Clarify offers a portfolio of CRM solutions which include Sales, Customer Service, Marketing and E-Business solutions. Clarify is now able to leverage Nortel’s call-center customers and use their expertise in the call-center environment. Before the acquisition, Clarify had posted several quarters of solid revenue growth and remains a strong competitor. Whether they will continue to challenge Siebel head to head for new business or simply feed off of Nortel’s customer base remains to be seen.

PeopleSoft Inc. / Vantive

PeopleSoft Inc. competes in two software segments - enterprise resource planning and customer-relationship management. They are in the process of acquiring SkillsVillage; the combination of these two companies will result in the industry's only pure Internet collaborative solution that automates a company's entire services procurement process. Customers can gain complete management control over spending on all services, and can automate procurement of services from requisition to payment and enable real-time collaboration between themselves and their services suppliers.

PeopleSoft’s position in Human Resources Management, eProcurement and Supply Chain Management gives them a huge competitive advantage, together with SkillsVillage PeopleSoft will become the first major enterprise vendor to deliver a full end-to-end solution for the entire services supply chain. PeopleSoft acquired Vantive at the end of 1999. Currently, PeopleSoft is offering a wide range of CRM solutions which includes communications and Analytics applications.

SAP

The largest vendor in ERP, SAP AG also exceeded projections in the first quarter. SAP’s strategy is to center on the online marketplace sector, with the technology developed by SAPmarkets, its U.S. based subsidiary. This allows companies to set up so called integration hubs that give users access to various pieces of software, including modules developed by third parties, through a single web portal. It incorporates a front end developed by SAPportals, another unit of the company, and Yahoo. SAP has ended its reseller agreement with Nortel Clarify, which provided the call center operation for SAP's customer relationship software.

Oracle

Oracle recently created a stir in the CRM market when it announced that it would offer free access to a hosted version of their SFA product. Their strategy appears to be to check Siebel’s dominant position in this market and open roads with new customers to sell other CRM applications.

Oracle is much more diversified, its E-business software is the one-size-fits-all package for managing any company's marketing, sales force, manufacturing, financials and Internet based activities.

They recently rolled out a new software and service package that promises its CRM software installation in 90 days, and if it misses it will pay for all consulting costs after that period. This marketing gimmick could enable it to install software much faster than Siebel Systems or Peoplesoft. Oracle also has plans to sell its products by offering them cheaper off the rack. Oracle is also introducing a fixed price software offering to corporations on a tight budget. The 90-day package is available at as little as $50,000 - but customers will not be allowed to customize the software. The strategy will likely decrease the size of the company's average CRM deal, but Oracle may come up ahead by signing more contracts.

Also, the fixed price campaign could be crucial to improving Oracle's financial performance, as big corporations are reluctant to signup for the expensive, long-term implementations that have typically accompanied the purchase of Oracle business suites. Oracle is trying to build upon its leadership in database software to sell more products that help companies automate a wide range of sales and administrative chores.

Since late last year, Oracle has promised to pay customers $1 million if its software doesn't run Web sites three times faster than products made by Microsoft, IBM and BEA Systems. It is also possible that they could acquire one of the smaller players in the market in order to round out their CRM suite and capture a larger share of the market. They are definitely a competitive threat for Siebel in the longer term.

Microsoft

Recently Microsoft stirred things up in the CRM market, with three significant announcements: the purchase of ERP software vendor Great Plains (GPSI), and partnerships with competing CRM vendors Pivotal (PVTL) and Onyx (ONXS). Microsoft's objective for CRM is to leverage its brand name and sell businesses on its .NET platform - the company's new strategy to make existing software available over the Internet. Its first deal was a strategic partnership with Pivotal for joint development, sales, and marketing of each other's products.

E.piphany

E.piphany’s CRM solutions combine analytic applications with operational CRM, enabling companies to mine customer data and act on it during each customer interaction to improve sales and service. Its customer base includes companies from industries such as Automotives, B2B marketplaces, Consulting, Financial Services, Insurance, Health Care, Technology, Telecommunications, Manufacturing and Retail, among others. They have teamed with Comergent Technologies, the leading provider of sell-side B2B e-commerce software solutions, to combine the Comergent Distributed E-Business System(TM) with the E.piphany E.5(TM) system. The result is the ability to manage the entire customer lifecycle - from demand generation, to sales transactions through to post sales support.

Vignette

Vignette, the foremost content management provider, has created a strategic global alliance with BEA Systems Inc. (BEAS), one of the world's leading e-business infrastructure software companies. By integrating Vignette's customer-driven Internet applications with the BEA WebLogic E-Business Platform, the alliance was formed to address customer demand for a comprehensive application solution paired with the market's leading standards-based e-business infrastructure.

Kana Communications

Kana Communications provides Internet-architect enterprise relationship management (eRM) solutions and delivers a broad range of integrated e-business and interaction applications. Kana solutions deliver personal portals that offer customers, partners and the enterprise a global view of their communications and relationships. This global view includes managing the full set of communications channels such as e-mail, Web, chat, instant message, VOIP, phone and person-to-person, as well as e-business and communications applications to integrate the marketing, sales and service functions.

MicroStrategy Inc.

MicroStrategy provides business intelligence software and related services. MicroStrategy's technology platform enables departments and enterprises to easily deploy web-based reporting and analysis solutions that can answer a vast array of business questions. The company also offers a comprehensive set of consulting, training and support services for its customers and partners. They have relationships with approximately 300 systems integrators, application development and platform partners. MicroStrategy solutions are deployed across various industries including retail, finance, telecommunications, dot-com, insurance, healthcare, pharmaceuticals and consumer-packaged goods.

Pivotal

Pivotal solutions combine eCommerce, business portal and customer relationship management capabilities within a flexible, standards-based architecture ideally suited to the needs of business-to-business (B2B) organizations seeking to merge the power of the Internet with traditional business models. By providing XML-based demand chain networks, Pivotal delivers personalized customer experiences across every touch point in real time. These networks manage collaborative relationships between customers, business partners and employees; guide intelligent commerce transactions across multiple channels; integrate the demand chain with the supply chain; and fully exploit Microsoft platform standards.

Other smaller specialized players in this area include Accrue, Broadbase, Digital Impact, Egain, Exchange Applications, Net Genesis, Net Perceptions, Onyx Software and Webtrends. These companies are typically focused only on one specific application or on creating applications for one particular industry.

Summary of Competitive Landscape  

Back to Table of Contents

Future Outlook:

Siebel is poised to be one of the leading information technology companies in the world. For this year, license revenues were expected to grow between 25% and 30%. After their surprise earnings announcement for the first quarter, Siebel stock jumped by about 10% ($3.28) to $37.20 in after-hours trading. It is trading today at $46.

Their main future threat apart from PeopleSoft was SAP AG with their new improved product portfolio and revamped U.S. sales and marketing structure. SAP's strong product base and the current switch by existing customers into SAP's fully integrated solution mySAP.com from SAP R3 could give SAP the potential to achieve its target and bring new products for SCM and CRM to the market.

Tom Siebel was concerned that their integrated solution was not as sophisticated as it excluded business intelligence, e-procurement and SCM, all features available with SAP's products. The only other company to offer an integrated solution of the same scope was Oracle Corp, but they offered more standardized solutions, not necessarily the best quality in all areas.

Further, SAP's new CRM application had provided a further boost to SAP's portfolio, the previous CRM application was very unpopular and proved to be problematic, but its replacement, mySAPCRM, had been a hit with the market. Customers resorted to Siebel when the old CRM solution was around, but now that it was improved, they were migrating back to SAP. SAP's CRM solution had proved to be more hassle free than Siebel's.

Tom Siebel knew that web services would become the main way of deploying software resources over the Internet for customers and businesses and the demand for wireless applications would grow and become integrated into the Internet based strategy. He was wondering what strategy and game plan to adopt to win and sustain the growth he had promised Wall Street.

Back to Table of Contents

Strategic Analysis:

The business imperative today for companies is to improve profits, increase efficiencies and reduce costs. Using Siebel’s customer relationship management software, companies can increase productivity levels, increase revenues and integrate their business systems to present a unique identity to their customers. Companies can use everything from sales force automation to customer call center software, marketing automation software, auctioning software and everything that would help them better their relationships with their customers. CRM initiatives can also help companies get better bottom-line results by persuading customers to use less expensive delivery channels.

Apart from industry expertise and strong technical skills, Siebel derives competitive advantage from very strong partnerships with the likes of IBM and Accenture. Overall, they have over 1,700 software and hardware vendors that are partners, and a customer base of over 3,000 companies. Though the economic downturn would probably mean that companies will start slowing down their IT spending, Siebel should be able to sustain and win in the long run based on their market position as well as their product quality.

Siebel's software products and applications are able to address a range of sales, marketing and service needs of a diverse range of enterprises worldwide. Hence, we believe that they can meet the challenges within the current CRM market and will continue to be the long-term leader in CRM space. Also, their growth in recent years has been rapid without any major problems, which again reflects a rapidly growing market segment and quality conscious producer.

In the last few years, many companies especially in the service sector have experienced explosive growth. They need powerful business solutions to support and sustain this growth; they need tools and applications, which can provide optimal performance and seamless integration among the various business units or locations, while being easily scalable for future needs. Siebel has the capability to provide an integrated family of applications software enabling multichannel sales, marketing and customer service systems. The advantage such applications present is, that personnel previously engaged in mundane and tedious transactions would have free time to focus on value-added functions.  This would not only result in substantial productivity gains, but companies could also increase transaction volumes and add new centers without hiring additional personnel.

Back to Table of Contents

Strategic Marketing and Business Model:

Siebel's basic business model consists of selling software i.e. revenue from licensing fees, and revenue from maintenance of the software and consulting services. Though the maintenance revenues are on going, consulting revenues are usually one-time and would exponentially decline, as the customers get more knowledgeable and familiar with the software and develop in-house capabilities to tailor and customize the software based on their changing needs.

Hence, it is absolutely necessary to broaden the spectrum of applications and widen their reach into different industries and applications. Strategic alliances and partnership agreements with complementing technology providers and specialized software designers in varied industries would reduce their response time (time to market) and also the technology transfer and know-how sharing would give Siebel competitive advantage.

Also, offering an integrated solution would help standardize customer-facing operations nationwide, as an example an integrated eBusiness Application package, including Siebel Call Center, Siebel Field Service, Siebel Wireless, Siebel eChannel, and Siebel eService would create a single multichannel customer information management system, which would enable customers to choose the mode of communication they prefer at any given time, and ensure representatives stay informed of all interactions to provide consistently enhanced service and enhance customers' satisfaction.

The recent strategic alliance between Siebel (Nasdaq: SEBL - news) and AT&T Wireless (NYSE:AWE - news), a global provider of wireless products and services, to jointly market and provide wireless access to Siebel eBusiness Applications via AT&T GSM/GPRS is expected to bring increased value to their joint customers. The combined mobile solutions from AT&T Wireless and Siebel Systems will help companies enhance the responsiveness and productivity of their field sales and service personnel while improving customer care and self-service. The scope of the alliance includes joint marketing, collaborative selling, and testing of mobile eBusiness solutions. Through this strategic alliance, customers of Siebel Systems and AT&T Wireless will benefit from having wireless access to Siebel eBusiness Applications, including Siebel Wireless, Siebel Handheld, and Siebel Remote applications. Target application areas and markets include field service, sales automation, financial services, energy, and communications.

Siebel Mobile Solutions provide users access to critical ebusiness information while on the go. These solutions support a wide variety of mobile devices, including WAP phones, handhelds, and laptop computers, while providing multichannel, multiplatform support for all Siebel eBusiness Applications.

This alliance brings together two industry leaders who will consistently and reliably deliver wireless access to critical customer, employee and partner channels.

Back to Table of Contents

Recommendations:

Siebel should design and develop an integrated solution / package for business applications. Businesses would prefer a complete solution package rather than isolated solutions. Microsoft’s winning strategy has been to bundle together word processing, spreadsheet and presentation graphics into Microsoft Office, which has given them competitive advantage. Today there are no individual spreadsheet software packages or no individual word processing packages available, but we get all applications in one Microsoft Office Suite. Individual software packages like Lotus 123, Word Star, Quatra-Pro, etc have become extinct because of software packages that offer a full range of personal and business PC software.

The theme in the market is fully integrated solutions and this is how companies like SAP in the Enterprise application arena, been able to survive in this tough environment. Smaller companies such as Commerce One and Ariba will not be able to compete with such dominant players, because of their limited product capabilities. They will either be bought out by larger companies or become small niche players.

Secondly, the major problem in CRM space today is measurement of the return on customer relationship management investments. Most CRM initiatives are huge undertakings that require companies to spend vast amounts of time and money. According to Meridien Research Inc., Financial services institutions are expected to spend nearly $7 billion this year on CRM, and that amount is estimated to grow nearly 14% a year. So, what do they get back for their money? Siebel says - Customer profitability?  It is very easy to measure geographic profitability or product profitability, but difficult when one has to measure, in a reliable way, customer profitability or customer value. Some companies measure CRM in terms of increased customer satisfaction, though traditionally they would rely on quantitative measures, they are increasingly taking into account qualitative measures as well.

Siebel needs to design and develop metrics that can help companies measure CRM investments and be able to justify the large investments. This would enable Siebel to market their value-added software to potential customers more aggressively supported with quantitative data instead of qualitative findings. One can measure the success of CRM strategy by customer retention rates across market segments and geography.

As the economic slump worsens, big-spending technology firms have already started to cut back on their project spending, with work force downsizing measures. But, Siebel should continue with new product development and not stop investing in R&D – which is their future. The same companies who have made substantial budget cuts would need those new products when the economy brightens. We strongly recommend that Siebel should invest in R&D especially during the weak economy.

Furthermore, constantly changing technology and the growing global landscape means successful companies must select the right partners and alliances toward a true customer-centric enterprise. Siebel is a cash rich company, they have sufficient cash as well as strong stock to make acquisitions. Acquisitions can not only help acquire technology but also add to their product portfolio. Also, the weak economy and dot-com crash would get them good deals.

Also, they need to secure alliance relationships with all the major providers of information and put CRM applications on more corporate desktops whenever possible. Siebel should ensure that the look of their partner products conform to a consistent Siebel product façade. But utmost care and due diligence should be executed that, sophisticated security rules are used to ensure that sensitive information is kept completely confidential. Investments in high security standards can be used as competitive advantage.

Deregulation in the energy and utilities industries can set energy companies on a new path for customer-relationship management. As part of deregulation, energy companies are required to provide competitors' pricing information to their customers, which makes customer retention a big issue for the energy companies. Already Shell Energy has decided to install Siebel Systems' Energy 99 Call Center application. Siebel should use the same as a leverage to get more energy companies on board.

References:

1.      http://investor.stockpoint.com

2.      http://stocks.ittoolbox.com/

3.      http://www.internetweek.com/ebizapps/ebiz

4.      www.siebel.com

5.      Siebel Systems – e Business Customer Success Stories

6.      Sales and Marketing automation – January 2000

  Exhibit I

Back to Table of Contents

Exhibit II  

Back to Table of Contents

Exhibit III

Back to Table of Contents

Exhibit IV           

Siebel Product Review:

Siebel .COM Applications

Siebel .COM Applications enable organizations to leverage the Internet to acquire new customers and enhance every customer relationship. Companies can create and execute Internet-based marketing campaigns to identify and acquire new customers, develop customized product and service offerings that meet customers' unique requirements and expectations, facilitate unassisted selling over the Internet, provide 24x7 customer service and support, and manage channel relationships to ensure optimum effectiveness and efficiency.

Siebel eSales

Siebel eSales is a comprehensive Web-based application that supports unassisted business-to-business and business-to-consumer selling via the Web, and enables organizations to rapidly establish an online selling channel that complements and extends their existing field, call center, and indirect selling channels. 

Siebel eMarketing

Siebel eMarketing enables organizations to create, execute, and assess Web-based marketing campaigns. Enterprises can segment their customer and prospect bases, target them with a personalized, automatically generated Web-or email-based communications or promotions, and view OLAP-based graphical reports that assess the effectiveness and return on investment of each campaign.

Siebel eService

Siebel eService provides powerful Web- and email-based service automation to manage the entire service process, allowing customers to easily create new service requests, enter service details, locate and track progress of open service requests, and view a knowledge base of solutions.

Siebel eChannel

Siebel eChannel enables organizations to maximize the revenue generating capacity of their multi-tiered, global distribution channels while lowering overall costs by allowing them to manage channel partners as extended virtual sales and service organizations.

Siebel Call Center Applications

Siebel Call Center

Siebel Call Center is designed for today's modern call center, enabling agents to handle a complete set of service, support, and sales interactions across a broad range of communications channels such as phone, Web, fax, email, Interactive Voice Response (IVR), and electronic data transfer. Agents can add value to the customer interaction by suggesting targeted offerings that are designed to meet the needs of the particular customer's profile.

Siebel Service

Siebel Service guides and assists customer service professionals through the entire service process, enabling them to better serve and satisfy their clients. Additionally, Siebel Service ensures that each service request is resolved within the agreed upon time, using automated workflow and escalation to route, monitor, and resolve each inquiry.

Siebel Professional Services

Siebel Professional Services provides software automation tools to initiate, execute, and manage complete professional service engagements. With Siebel Professional Services, organizations can create project activity plans, assign resources based on skills and past performance, manage contracts and subcontractors, perform rate schedule administration, streamline time and expense management, and create comprehensive reports to track project status.

Siebel Product Configurator

Siebel Product Configurator ensures that every proposed product or service configuration is accurate, complete, and correctly priced before it is recommended to the customer. 

Siebel Incentive Compensation

Siebel Incentive Compensation provides organizations with comprehensive sales compensation management capabilities that meet the needs of sales representatives, sales managers, executives, plan designers, and administrators. 

Siebel Handheld

Siebel Handheld gives remote sales and service professional’s real-time access to comprehensive customer and prospect information via a wide variety of handheld devices.  

Siebel Industry Applications

Siebel Industry Applications are designed to address industry-specific business challenges using the entire range of Siebel Systems' sales, marketing, and service solutions. Each industry-specific solution combines the proven strengths of Siebel eBusiness Applications — including Web-based architecture, tight integration with back end systems and speed and ease of system configuration and deployment — along with the in-depth industry experience of Siebel customers and partners.

Siebel eFinance

Siebel eFinance enables financial services organizations to establish and maintain long-term profitable relationships with consumer, small business, and corporate customers. 

Siebel eInsurance

Siebel eInsurance provides field agents, brokers, and call center professionals with comprehensive policy management, automatic quote generation, and integrated claims processing for personal property, automobile, life, and commercial lines of business. 

Siebel eHealthcare

Siebel eHealthcare gives organizations the ability to streamline their sales, customer service, and policy and claims management. 

Siebel eCommunications

Siebel eCommunications gives wireline, wireless, cable, and Internet service providers a single customer database and consolidated view of the customer, enabling them to maximize each customer interaction across all channels. 

Siebel eAutomotive

Siebel eAutomotive enables manufacturers and dealers to sell to, market to, and service retail and fleet customers through multiple channels including the Web, the field, and call centers. 

Siebel energy

Siebel eEnergy provides regulated electric, gas, and water distribution companies (LDCs) and unregulated energy service providers (ESPs) with comprehensive functionality to increase sales productivity, improve customer service and loyalty, and maintain profitable and lasting relationships with commercial, industrial, and residential customers.

Siebel ePharma

Siebel ePharma enables pharmaceutical account representatives to establish, manage and support relationships with physicians, hospitals, and HMOs, as well as strategically influence the sale of pharmaceutical products through comprehensive formulary management capabilities. 

Siebel ePublic Sector

Siebel ePublic Sector is a complete call center and customer service solution that enables national and local government agencies to be more responsive to all their constituencies. 

Siebel eConsumer Goods

Siebel eConsumer Goods is a comprehensive solution that improves trade promotion effectiveness, ensures retail execution of corporate objectives, and efficiently routes account calls for consumer packaged goods (CPG), fast moving consumer goods (FMCG), over the counter (OTC), and durable consumer goods companies. 

Siebel eTechnology

Siebel eTechnology enables technology providers to better sell to, market to, and service customers and prospects across any customer-preferred channel. With Siebel eTechnology, field sales, telesales, and telemarketing departments can manage sales opportunities, qualify deals, and effortlessly generate quotes, proposals, presentations, and sales orders tailored to the customer's unique requirements.

Siebel eApparel and Footwear

Siebel eApparel and Footwear provides manufacturers with a closed-loop sales, marketing, and service solution from brand planning to assortment planning and field sales.

Back to Table of Contents

Exhibit V: Market Shares across Product Categories

Back to Table of Contents