Siebel Systems Inc.s 2000 annual report contains some pretty amazing facts and figures. The company reported consolidated revenue of almost $1.8 billion, a 121 percent increase over 1999 revenue. Customers report an average return on investment in less than 10 months. Ninety-six percent of these customers find Siebels solutions consistent with their long-term IT strategy, and the company claims that 98 percent of its customers are ready to buy from Siebel again.
With a customer list that reads like a Whos Who of Fortune 500 companies, everybody (vendor and integration firms alike) wants to partner with these guys. Whats their secret?
For Mature Audiences Only
To an extent, its the maturation of the market. Players in the customer relationship management (CRM) space have convinced corporate America that while their back-office systems, factories, manufacturing processes and supply chains have been optimized 16 ways from Sunday, not a lot has been done for customer and prospect operations in the front office. These "customer facing" operations—sales, marketing and customer service—can be optimized along similar lines, yielding increases in customer satisfaction, sales efficiency and, of course, revenue.
All of that evangelism has paid off, big time, for CRM vendors like Siebel and PeopleSoft. And the future still "holds promise," according to Cahners In-Stat. Beginning in 2002, operational CRM revenues are expected to grow between 30 percent and 40 percent through 2005, the firm projects.
Cahners also predicts that the United States is expected to reach roughly $8 billion in operational CRM revenues by 2005, accounting for roughly 44 percent of similar revenues worldwide. Operational solutions are defined as those that automate and manage processes associated with customer interactions of sales, marketing and service through either a phone or the Web.
Architecturally, youve probably already seen something like Siebels n-tier system design. Several abstraction layers exist, which direct program operation, presentation, operation of controls and business logic. Its in those layers that the integrator will primarily contribute its value add from an implementation perspective.
A variety of clients (HTML, ActiveX, Windows and WAP, to name a few) connect over the network via TCP/IP to the Siebel Server. The server (there can be more than one, depending upon the size and complexity of the installation) runs all the applications and manages the necessary connections to external databases, legacy systems, authentication directories and the like.
Customizations to the applications are stored as metadata in the external database; upgrading the core Siebel application is relatively painless, because the custom modifications are not part of the core product.
The apps themselves can be easy to customize. In some cases, its simply a matter of adjusting properties of components within the individual applets (Siebel calls them "Views") via a picklist. Applets can be dragged and dropped onto a canvas that simulates the screen real estate. Dont like the prebuilt applets? Its an easy matter to create your own using the object-oriented IDE of Siebel Tools. Visual Basic is also supported for scripting out-of-the-ordinary event sequences.
Were not saying that its simply a matter of "drag and drop" for every customization, but in a majority of cases, it will suffice. While the basic building blocks delivered with the application are comprehensive, Scott Simon of Siebel partner Akibia Inc. finds that about five to ten percent of his customers want to "stretch" the application by adding new links and joins as well as extending the database schema. Thats not a Herculean task, because the base Siebel product has more than 1,000 columns that arent assigned to a specific function and are ready to be used for this type of customization.
Of course, you can start from scratch if youve got a process to map or some unusual data to collect. The Siebel API is well-documented and makes extensive use of contemporary programming constructs (COM and>> CORBA, for example) to expose the internals of the Siebel application server to the outside world. All in all, the software is well-thought-out, highly configurable, easy to manipulate and simple to maintain. The multitiered architecture protects an implementations investment in business logic, intellectual property and processes from the vagaries of technology, allowing for a "configure once, deploy everywhere" delivery strategy.
A Vertical Leap
While the Siebel core application and infrastructure is state-of-the-art, the company has stepped ahead of the competition by creating special, industry-specific versions of its software for specific vertical markets. Each solution provides specific terminology, functionality and process flows that are germane to the intended user base, yet all of the solutions are designed to run on the same core infrastructure. Thats because each of the customizations is stored as metadata in the repository, and not as actual program code. Given that the industries covered sell either goods or services (or both) through different channels and may use third parties, its no small feat. Its an elegant and efficient demonstration that validates the power and flexibility of an abstraction-layer architecture.
Siebel produces vertical customizations for the automotive, consumer goods, telecommunications, finance and insurance industries, as well as for the public sector and utilities. New verticals are continually added. "Our business has traditionally been in the finance and telecom areas," notes Siebel VP and general manager Jeff Scheel. "But were seeing some strong growth in the life sciences, public sector and automotive areas." Scheel also notes that the travel and hospitality marketplace is "up and coming."
The vertical strategy, while widening the appeal of the Siebel solution, can also be a curse, at least for Siebel. There are now at least 147 products in the companys line, and although they all run on the same plumbing, its become impossible for a single individual to master all of the nuances of each product. "Were beginning to see Siebels sales force stratify into specific areas of market expertise," notes Akibias Simon.
While the company steadily grows the breadth and depth of the vertical solutions with dedicated business units, its pursuing a complementary strategy in building a partner ecosystem to support those different markets. Thats where integration partners with specific industry domain expertise come in. Siebel relies on its partners to complete the picture.
Thumbs-Up From Partners
And Siebel has learned how to partner effectively. It has A-list partners in every category, from hardware and software (Avaya, Cisco, Compaq, IBM, Microsoft, Oracle and Sun) to content and integrators (Andersen, Cap Gemini Ernst & Young, Deloitte Consulting, IBM Global Services and PricewaterhouseCoopers).
The partners that we spoke with all had nothing but accolades for Siebel. Adam Klaber of PricewaterhouseCoopers (PwC) admires the companys focus on product development, commitment to customer satisfaction and its vertical strategy. "Theyre far more advanced than any other vendor in this [vertical market] area," he says.
PwC formed a global strategic alliance with Siebel in 1995 and now has 250 clients with more than 500 implementations under its belt. Some projects have been performed in as little as 12 to 16 weeks, where others have been multiyear initiatives.
The Customer Is No. 1
One cannot say that customer satisfaction gets lip service at Siebel. Interviews with a number of Siebel employees and partners revealed that there is always a very strong commitment to customer satisfaction. Steven Mankoff, VP of Technical Services, measures customer satisfaction as having a system in place that delivers the targeted business benefits as expected. The company uses an outside firm, Satmetrix, to quantitatively measure customer satisfaction periodically, and a portion of many Siebel employees compensation is determined by those numbers.
Siebel strives to have direct customer involvement in every engagement the company undertakes. In addition to its 3,600+-person direct consulting force, Siebel maintains a staff of technical account managers whose job it is to monitor the overall state of each engagement. The rationale behind the account management team is to catch problems before they become issues, according to Mankoff.
A partner certification program has been in place for about two years, and Mankoff has seen a direct correlation between the level of training and certification that a system implementor receives and the relative rates of end customer satisfaction. Thats why Siebel requires its own consulting staff to become certified using the same training as a condition for continued employment.
The company has three tracks of training available—for management (high-level but little technical expertise), analysts (overview of the products and a significant understanding of how to scope a project) and implementation teams (installation, configuration and administration of the Siebel product). Courses are delivered both on- and off-site, and self-paced material is available via the Web and CD-ROM.
While weve painted a rather rosy picture of Siebel here, were sure the company has its share of dirty laundry. Nonetheless, it has shown a stellar set of revenue increases over the past few years. This year has been different—for everybody—yet the company has managed to maintain several $500+ million quarters.
Siebel is playing in a space that has major upside potential (especially in the midmarket arena), and its looking for partners to add that little extra something to the special recipe. You, perhaps?