CRM Leader Siebel Is Only Halfway There

Siebel, the uncontested but lately battered leader of the CRM market, finally entered the 21st century. It did so with the launch of Siebel 7, a revamping of the application suite that helped Siebel earn nearly $1 billion a year. The release signifies the end of one trend and the beginning of another. The ending trend is the opening up and Internet-enabling of front-office architectures. Siebel is simply the last big CRM vendor to take the plunge. Siebel 7 also signifies the beginning of another trend—that of a series of mergers and acquisitions that will lead to a dramatically different landscape in the coming years.

On the architecture front, Siebel is the last CRM vendor to kick away the vestiges of the client/server mode that it rode to success in the 1990s. The trend started with PeopleSoft when it merged with Vantive, grabbed that companys CRM package and melded it into the PeopleSoft Internet Architecture. The result was the spectacularly successful PeopleSoft 8.

Siebel took the conservative road—ironic after it spent a billion dollars over several years to rewrite its application. Instead of rewriting the architecture, it opened it up, promised support for .Net and J2EE, and rewrote its client pieces.

This was a necessary step, but its not the one thats going to propel Siebel to world domination. Thats where the mergers come in. Siebel is quietly buying small companies and partnering with bigger ones to take CRM to the next level. Some say that that level might be PRM (partner relationship management), and some say it might be ERM (employee relationship management).

Thats bogus. The world dominator will be the company that can integrate back-office and front-office applications and a development platform.

As I wrote this column, Siebel was rumored to be buying I2, the powerhouse supply chain management company. If Siebel really wanted to be a powerhouse on the level of Oracle and Microsoft, however, it would have to merge with BEA Systems to cover the three tiers of enterprise software: the front-office application, the back-office analytics, and an open application and transaction platform.

The chances of Siebel buying I2 are pretty slim, though. After all, I2s founders shrugged off all venture capital funding when they started the company because they wanted to control the company and its future. Theyre not going to change now, and theyre certainly not going to want to report to Tom Siebel. Besides, large Texas (I2) to Silicon Valley (Siebel) mergers are fraught with peril. For now, though, we just have Siebel 7.