Siebels Grip on CRM Slipping

Company slow to introduce Web-based CRM upgrade; customers turn to other, less expensive apps.

As Siebel Systems Inc. introduces the long-awaited Web-designed version of its CRM software suite this week, the companys customer relationship management dominance could be slipping, particularly with small and midsize businesses.

The new architecture in Siebel 7, which the company will announce at the Siebel Worldwide User Week conference in Chicago, has got current and prospective customers buzzing. But it will be too late for many potential Siebel MidMarket Edition customers that have already given up on the companys software 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 applications will be accessible through a browser with no client software required, using Siebels new SmartWeb architecture. While the server software will keep the same C++ architecture, the presentation layer will be Dynamic HTML with some Java- Script and Java applets, said Siebel officials in San Mateo, Calif.

Users of Siebels current versions said Siebel 7 will go beyond the companys Web-based eSales and eService offerings to provide equivalent features of the client/server version. Some also said the new Web-based version will make it easier to outsource the Siebel suite 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," said Dave Wessinger, chief technology officer of Wescom Solutions Inc., in Mississauga, Ontario.

Wescom, which uses Siebel MidMarket Edition, a scaled-down, less expensive version of Siebels enterprise application suite targeted at smaller organizations, is happy with the software. But many MidMarket Edition customers that couldnt wait for Version 7 will never know.

After about three months, San Francisco-based E-Color Inc. wrote off Siebel MidMarket Edition as the "wrong tool for the job" for its 30-person sales department and switched over to upstart hosted Web-based CRM service provider Inc. for cost and ease of use.

"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," said Peter Bernard, vice president of product marketing at E-Color.

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

Bernards concerns about upfront and ongoing costs were echoed by several Siebel MidMarket customers.

Issues of cost—and increased competition from companies such as and PeopleSoft Inc.—wont likely go away any time soon.

Microsoft Great Plains, the enterprise applications unit of Microsoft Corp. and a Siebel partner, has faced challenges in its Siebel implementation. MSGP uses Siebel Enterprise Edition while its partners, which resell the integrated Microsoft Great Plains Siebel Front Office suite, use Siebel MidMarket Edition. Getting those systems to share data so MSGP can get a better sense of its partners opportunities is not easy, said Don Nelson, MSGP vice president of front office, in Fargo, N.D.

"Theres no commercially available tool that can integrate data from Siebel MidMarket Edition with data from Siebel Enterprise," Nelson said. "Its presented some challenges for us."

Nevertheless, the Siebel-MSGP relationship remains strong, Nelson said.

Despite Siebels assurances to the contrary, the upgrade could be problematic. "The upgrade will not be as easy as for earlier versions," said Hari Madamalla, CRM practice director at Miracle Software Systems Inc. The Southfield, Mich., company is a Siebel customer as well as an implementation and development partner. "Youll be spending more money on the upgrade. Its no longer a one-button upgrade."

Siebel officials said upgrade headaches would be most felt by those customers that have client-side interfaces to other applications such as Microsoft Excel spreadsheets since the new version of the software will not use a Windows client. But they said the server-side APIs will remain the same.

Siebel 7 is due before Thanksgiving. Vertical-specific versions of Siebel 7 are slated to be generally available 60 to 90 days later, officials said.