Lawrie Proves No Match for Siebels Troubles

Opinion: The abrupt resignation of Siebel Systems CEO Michael Lawrie demonstrates that even the most gifted corporate manager may not get all the time and patience needed to turn around a troubled technology company.

The sudden resignation Wednesday of Siebel Systems CEO Michael Lawrie is an object lesson for all veteran corporate managers who believe they can turn any company around.

Lawrie arrived at Siebel last summer after building a sterling career at IBM, where he worked as a turnaround specialist at several divisions at that sprawling technology company.

Siebel should have been one more successful assignment on Lawries resume. But Siebel, which virtually invented the CRM (customer relationship management) software sector in the 1990s, is a special case.

The post 2000 IT technology recession hit Siebel hard, and the company resorted to staff cuts and restructuring to stem the flow of red ink. At the same time Siebel was facing more competition on the high end from diversified producers of enterprise resource planning software suites from Oracle and SAP that included CRM software. At they low end the company was dealing with competition from new lower-overhead hosted CRM application services offered by and RightNow Technologies.

Lawries boss was Tom Siebel, the founder of the company who had given up the CEO position with the idea of bringing in a professional manager who would get the struggling company back on track to consistent growth.

And for the first couple of quarters on the job it looked like Lawrie was going to be as successful as he had been at his IBM posts. In January, Siebel reported fourth-quarter 2004 revenue of $392 million, ending 13 straight quarters of declining revenue.

/zimages/5/28571.gifClick here to read the details about the resignation of Michael Lawrie and the appointment of George Shaheen as the new Siebel CEO.

But just as quickly Siebel hit a wall. The company warned Wednesday that it was cutting its estimate for first-quarter revenue 13 percent from $345 million to $300 million. This would be the lowest sales tally in five years and exactly the sort of numbers Siebel didnt want to report.

The shortfall was apparently far more than the company was willing to accept under the watch of its new turnaround specialist, so they agreed to part ways.

Lawrie was given short shrift because of "very high expectations of Siebels board to drive revenue and maintain a substantial lead over SAP," said Mary Wardley, a CRM industry analyst with IDC, in Framingham, Mass.

In the conference call Wednesday in which the company discussed Lawries resignation and the reduced sales estimates, Siebel board members "focused very heavily on the operational performance as well as the value to the customer," which was what Lawrie was supposed to be taking care of, Wardley said.

/zimages/5/28571.gifClick here to read eWEEKs recent interview with Michael Lawrie.

"My sense is that the goals of the board were very aggressive, and he didnt hit them," she said. It wasnt a surprise to Wardley that first-quarter sales figures were down because early-year results are always lower than the later quarters, Wardley indicated. In the conference call, "Tom Siebel said that the previous quarters were not as high as they wanted them," she said, which didnt help Lawries cause.

Now its the turn of 10-year Siebel board member George Shaheen to see if he can get the company on a consistent growth path. Shaheen is the former head of Anderson Consulting, which has since been reorganized as Accenture. He is also remembered as the manager who was at the helm of dot-com grocery delivery service Webvan in the midst of its 2001 collapse.

Next Page: How will Shaheen respond?

John Pallatto

John Pallatto

John Pallatto has been editor in chief of QuinStreet Inc.'s since October 2012. He has more than 40 years of experience as a professional journalist working at a daily newspaper and...