Siebel Poised for Web-based CRM Upgrade, But Cracks Show

As Siebel Systems Inc. prepares to announce the long-awaited Web-architected version of its customer relationship management software suite next week, the companys CRM dominance could be slipping, particularly in the midmarket.

Theres no question that many Siebel customers-existing and prospective-will welcome the launch of Siebel 7, which is expected to be announced at the Siebel User Week conference in Chicago on Sept. 30.

But the new architecture will be too late for many potential Siebel Mid-Market Edition customers, who have already given up on Siebel in favor of other applications they say are less expensive, easier to run and manage, and deliver the same level of function they were looking for.

Siebel 7 has been rearchitected for the Web, allowing users to access it through a browser, replacing the clunkier client/server architecture of current versions of the market-leading software.

"The main reason to upgrade is you dont need to install the software on any machine, just a browser," said Hari Madamalla, CRM practice director at Miracle Software Systems Inc., a Siebel customer as well as implementation and development partner. "Its a true thin client. Easy access, easy portability."

Madamalla, in Southfield, Mich., said hes used Siebels existing Web-based offerings like eSales and eService before but that the new software will go well beyond those in terms of function provided, adding all the features of the full client/server package.

Dave Wessinger, chief technology officer of Wescom Solutions Inc., in Mississauga, Ontario, also welcomed the new version of Siebel, although hes been on Siebel 6 for just seven months.

"Im looking forward to it very much," Wessinger said. "As soon as its ready and stable for the midmarket, well be on it."

Wessinger said the new Web-based version of the software will make it easier for his organization to outsource it to a hosting provider, saving on administrative costs and headaches.

"[The application infrastructure] is something we really dont need to manage if we dont have to," he said. "We can allocate those resources elsewhere.

Overhead savings

"You simply access it via the Web," Wessinger added. "Its mobile; you can access your data in a secure way without the overhead [of having] the software installed, maintained, managed and run--the maintenance costs. You simply use a browser. The time and cost savings are tremendous. Were simply users of the application; its not a part of our business. Its not a problem for us. Its just something we dont want to focus on if we dont have to."

Both Miracle Software and Wescom are customers of Siebels Mid-Market Edition, a scaled-down, less expensive version of Siebels enterprise application suite targeted to smaller organizations. If the new Web architecture will make the software easier to host, that would seem to be a boon for those companies.

But many Mid-Market Edition customers, who couldnt wait for Version 7 or the San Mateo, Calif., companys CRM suit, will never know.

"It was just not a cost-effective solution for us," said Sam Pulino, president of Pinnacle Document Systems Inc. in Pleasanton, Calif. Pulino had actually been listed by the company as a customer reference for Siebel Mid-Market Edition. But after "living with" the software for 18 months, he switched over to Interact Commerce Corp.s SalesLogix application suite.

Pulino was looking to add marketing capabilities to the core sales force automation functions he was using Siebel Mid-Market Edition for. He said adding such capabilities to his Siebel package would have cost an additional $100,000. Instead, he got the same capabilities from SalesLogix for $40,000, about the same as the upfront fees he paid for Siebel.

"Theres a lot of hidden stuff they didnt talk about when we were first buying the software," Pulino said. "Youd have to spend $5,000 for a tool to use [to make changes to the software], then another $2,500 to take a class to learn how to use the tool.

"Theyre a difficult organization to work with for a small company," Pulino continued. "Theyre more suited to dealing with large enterprises that buy 50 to 100 licenses at a time. For small companies, they say theyre experts, but they really dont get it."

Those sentiments were echoed by Peter Bernard, vice president of product marketing at eColor Inc., a San Francisco-based company that develops software for color-correcting Web images.

"For the size of organization we were, the cost to implement it just became prohibitive," said Bernard. "It would have required a full-time IT person, plus consultants. It wasnt sold that way, but thats what happened.

"It wasnt the upfront costs; it was the ongoing costs," he said. "Every week or month youd find another field that needed to be redefined because the way it was preconfigured wasnt what you needed. So youd have to call a consultant to add a pull-down menu or something. You can make the case that youre just supposed to use it the way it is, but then youre not getting the most out of the system."

The costs just kept expanding.

"I went to a trade show and saw their Pocket PC client demod," Bernard said. "It was $500 a seat. Thats more than what the handheld cost. It was just ridiculous."

Wrong tool for the job

After all of about three months, Bernard wrote off Siebel Mid-Market Edition as the "wrong tool for the job" for his 30-person strong sales department and switched over to upstart hosted Web-based service Salesforce.com instead, which his organization has happily used for the past year and a half.

"Siebel was talking about a Web-based client at that time, but by the time they got down the road, we still had to deal with the ongoing costs," Bernard said.

Pulino and Bernard both found fault with Siebels usability as well. "If our salespeople loved it and it was easy to use, we would have had to make a tough decision," said Pulino. "But it was cumbersome, hard to get around in and hard to use. There was no reason to spend that kind of money for it."

Bernard also noted that the softwares data syncing capabilities were subpar. Yet he conceded that data syncing and usability could be greatly improved with the new Web-based architecture.

But issues of cost-and increased competition from companies like Salesforce.com, as well as from traditional CRM software vendors like PeopleSoft Inc.-wont likely go away anytime soon.

Michelle Miller, vice president of IS at MedSolutions Inc. in Nashville, Tenn., said her company recently chose PeopleSoft 8 CRM, which was introduced in June, primarily because of its Web-based architecture.

"We were on track to start our implementation in late August, early September," said Miller. "If the software wasnt in front of us, if it wasnt generally available, it wasnt a viable option."

Siebel isnt expected to make the Web-based Siebel 7 generally available until the first quarter of 2002.

But there are cost issues for MedSolutions as well. Miller said Siebels enterprise edition would have cost the company around $1 million in license fees. Even Siebel Mid-Market Edition would have cost the company, which has 85 employees and $15 million in annual revenues, about $225,000. PeopleSoft 8 CRM came in at just under $200,000.

Despite the lower cost, the PeopleSoft software still has workflow automation, customization and real-time data integration capabilities that Siebel Mid-Market Edition lacks, Miller said.

Like Pulino, Miller faulted the way Siebel deals with smaller companies.

"We were served better by PeopleSoft," he said. "With Siebel, it was like we were just a blip on their radar screen. Were obviously not their target."