Siebel CEO Urges Customers to Stay the Course

At the annual user conference, George Shaheen stresses the value of customer service and makes light of the pending acquisition by Oracle.

BOSTON—During his brief keynote address at Siebel Systems Inc.s annual user conference here in Boston, CEO George Shaheen outlined why Siebel customers should continue to invest in the companys technology, despite declining revenues over the past few years and an impending acquisition from Oracle Corp: Profits in this economy come from customers, and not new product development.

"Business innovation is not enough; new product innovation is not enough," said Shaheen, to an audience of about 2,600 Siebel users. "Companies are wondering what to do. Our advice is to focus on the customer. Get more from the customer."

Shaheens premise is that companies that innovate by focusing on the customer do substantially better than those that focus on, well, innovation alone. As a proof point, he highlighted an Accenture study that said 40 percent of growth and 38 percent of shareholder value is derived from customer loyalty, along with several customer highlights. For example, the Department of Homeland Securitys U.S. Citizenship and Immigration division, which has used Siebels technology to reduce customer call times by 25 percent (from a prior paper-based system) and increased customer satisfaction by 6 percent.

Despite the seemingly overwhelming success derived from a customer-facing approach, CRM (customer relationship management) software, which Siebel has pioneered, has had little widespread adoption in the enterprise. To this end, Shaheen announced the companys next generation of technology—the Customer Adaptive Solutions, whose aim is to solve user issues by enabling lightening-speed adaptability at the system and process level.

"With our Customer Adaptive Solution the end game changes big time to become truly customer adaptive," said Shaheen. "We will increase the breadth and depth of our product line. There is more coming your way. We will deliver on our promise [to enable you] to leverage one customer [for ROI]."

What the Siebel Customer Adaptive Solution boils down to is a strategy and architecture that brings together all of Siebels products and services on a SOA (service oriented architecture) platform—the details of which Shaheen left to another company executive, Bruce Cleveland, senior vice president and general manager of products, who followed with a separate (technically challenged) keynote address.

Finally, Shaheen acknowledged the elephant in the auditorium: his new boss and parent company, Oracle. "We have a new player in our midst," said Shaheen, by way of an introduction to Oracle CEO Larry Ellison.

Oracle, of Redwood Shores, Calif., is in the process of acquiring Siebel. In Sept. it put in a $5.85 billion bid for the CRM vendor. The deal, subject to regulatory approvals, is expected to close in early 2006.

/zimages/6/28571.gifClick here to read more about Oracles proposed acquisition of Siebel Systems.

Ellison, whose videotaped address prompted a collective sigh of resignation from audience members who hoped they might get a glimpse of the bombastic CEO in the flesh, said Oracle is very excited about the combination of the two companies. Ellison also repeated the key phrase—an assurance surely most Siebel users are looking for. "Siebel has been a pioneer, spending 10 years developing [CRM software]," said Ellison. "It will be the foundation for Oracle CRM going forward."

Ellison also gave a nod to Siebels Customer Adaptive Solutions by saying that what Siebel is doing with SOA "dovetails really nicely with what Oracle is doing going forward." Oracle is in the process of developing its next generation suite of applications—Project Fusion" —that brings together the best of functionality from its three separate ERP suites in a services-based architecture. Siebels technology will be the foundation for Fusion CRM.

Oracle also plans to leverage Siebel On Demand for its own on-demand offering.

Once back on stage, Shaheen, in a black suit, joked that he—and the rest of Siebels employees—are going to love the dress code at Oracle. Ellison, in his videotaped address, was outfitted casually in a turtleneck, sans his usual matching jacket.

Shaheen detailed how the merger will make both companies even stronger in the marketplace.

"It has to," he said. "Look at the combined companies. Weve invested over four billion in technology, holding over 39 patents. In the future we will present seamless continuity in everything we do. The technology will be easier to integrate, so you can get more out of it. Thats our real goal."

The Siebel acquisition, which is expected to pass any regulatory hurdles, will be Oracles 10th buy in six months—and its second largest to date. Earlier this year Oracle acquired PeopleSoft Inc. (and by default J.D. Edwards & Co.) for $10.3 billion. Including Siebels offerings, Oracle will have a stable of about half a dozen separate CRM offerings.

Ellison has said the introduction of Siebels software in the mix will not hinder Project Fusions 2008 delivery timeline.

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