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Reference customers slam Siebel

Siebel software is too expensive, costs too much to maintain and doesn't yield ROI, according to Nucleus Research. Nucleus arrived at these findings after surveying customers listed as references on Siebel's own Web site.

In what can only be described as a damning report card on the world's leading CRM vendor, Nucleus Research found that customers of Siebel Systems Inc. are largely dissatisfied and are not achieving a return on their CRM investments.

To make matters worse, the findings come from telephone interviews the researcher conducted with reference customers plucked off of Siebel's Web site.

"Frankly, I'd never put references this bad on my resume," said Rebecca Wettemann, vice president of research at Wellesley, Mass.-based Nucleus and author of the report.

Of the 23 Siebel reference customers that agreed to confidential interviews, 61% reported a negative ROI after two years due to challenges with end-user training and customization. Roughly half of the entire pool, however, admitted that they did not have methods in place to measure ROI.

Fifty-five percent also said their installations went over budget, and 57% said the installation process took longer than expected.

Customers also complained about the software's cost, which Nucleus estimates is $18,040 per end user per year and runs an average of $6.59 million per implementation.

Over time, most customers were also paying escalating consulting fees to support Siebel applications, according to Nucleus.

When contacted by, Siebel declined to make an executive available to comment on the findings. Instead, it issued a statement calling the report "statistically insignificant" and emphasizing positive case studies from other analysts.

Nucleus did not ask customers whether they plan to abandon Siebel in favor of other CRM vendors, but the report cannot bode well for San Mateo, Calif.-headquartered industry giant. Latest figures have Siebel owning roughly 45% of the CRM market.

Wettemann said several customers did indicate they had no plans to buy additional software from Siebel or upgrade to Siebel 7, the latest iteration of Siebel's flagship CRM suite.

More troubling to some may be the apparent contradiction between what these customers told Nucleus and what Siebel reported on its Web site. The customer reference page was pulled from the site after Nucleus issued the report.

"Maybe [Siebel] has the same people doing their marketing materials as Enron had doing their numbers," said Wettemann, who added that she spoke with "the happy customers," making one wonder about others.

Wettemann said some of the problems uncovered could be inherent to the CRM industry, where reports of failed implementations are rampant.

Yet she called Siebel the vendor "poster child" for mistakes. Most companies interviewed expected to deploy CRM quickly with minor tweaking in functionality but later discovered the need to embark on expensive development efforts.

Nucleus does plan to do similar customer reference checks on other CRM vendors. The original intent of this report wasn't to dig up Siebel dirt, but rather to uncover ROI best practices. The tone of the report changed after talking to customers, Wettemann said.

The report was conducted independently and was not sponsored, according to Nucleus.


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