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Competitors eager to paint Siebel as a falling star

While these are undoubtedly tough times for CRM giant Siebel, competitors' claims that they're stealing customers away from the market leader may be a bit overblown.

If you listen to the claims of some CRM vendors, a mass customer exodus away from market leader Siebel Systems Inc. is underway. Yet, on closer inspection, it appears that business circumstances rather than customer dissatisfaction led to at least some of these Siebel defections.

Competitors have been trumpeting major wins of former Siebel users. In fact, at its user conference this summer, Pleasanton, Calif.-based PeopleSoft issued a press release announcing six companies it said it has wooed away from Siebel.

The only one of these companies that PeopleSoft could put SearchCRM.com in touch with was Crestone International Inc. in Atlanta, an enterprise applications consulting firm that gets the bulk of its business from PeopleSoft products. The firm used Siebel applications internally for three years and served in a consulting role with the vendor for just as long -- up until the time it moved to PeopleSoft technology.

"[Siebel's] products worked fine for us," said Sean McCormack, Crestone founder and COO. "It was working with Siebel that was a pain in the butt."

In addition to his contention that the company was inattentive, McCormack's biggest complaint with Siebel was that Crestone was repeatedly forced to buy additional pieces of software to customize its CRM deployment.

"It felt like they were nickel-and-diming us at every turn," he said.

Yet McCormack admits that his PeopleSoft applications don't have "all the bells and whistles" that Siebel products offer. In fact, he said the biggest attraction to PeopleSoft was that his company was already using the vendor's applications in its back office. The emergence of PeopleSoft CRM offered the ability to more closely integrate its front- and back-office software, he said.

In another scenario, a former Siebel user who turned to hosted sales force automation specialist Salesforce.com in San Francisco admitted that the slumping economy kept his company from upgrading to the Siebel 7 suite.

"We went from 130 salespeople and plans to grow, down to 30 salespeople," said Norm Pensky, vice president of sales at Orinda, Calif.-based Intraware Inc., an applications hosting provider. "Siebel simply didn't make sense for us after the tech market hit us hard."

In fact, Pensky said he was pleased with Siebel as a vendor and felt the company worked hard to help Intraware make its CRM deployment work. He said he'd even consider moving back to Siebel if the right situation ever presented itself, although he's currently happy with the quick deployment and ease-of-use that's come with Salesforce.com.

Scott Nelson, vice president and research director at Stamford, Conn.-based researcher Gartner Inc., said Siebel is an easy target because of its leadership position.

"Siebel will always be vulnerable," he said. "But I think [losing customers] is not an issue unless you start to see a consistent pattern of Siebel getting tossed out of deals or frequently being replaced by a particular vendor."

Nelson said this isn't yet the case. He also believes some vendors have given away CRM software with other applications and called these deals CRM customer wins. For instance, Nelson said SAP has been known to offer CRM tools along with its R/3 ERP package.

Nelson said Siebel competitors need to build market share and try to get references any way they can. In the end, however, he still believes Siebel remains far ahead of the pack. Latest figures have Siebel owning 45% of the CRM market.

Tough times for Siebel

Still, lately Siebel has been getting a lot of bad press due to its shaky financials, a damaging research report and recent public comments by its founder that were controversial.

Siebel reported Q2 earnings that dropped 28% year over and resulted in the company cutting 16% of its workforce.

Last month Wellesley, Mass.-based Nucleus Research issued a report saying reference clients that Siebel had listed on its own Web site aren't all that happy. More than half said they did not achieve a return on their CRM investment. However, many of those same critical customers admitted having no detailed method to measure ROI, a self-inflicted error in any IT project.

Plus, CEO Tom Siebel touched off a public relations nightmare at a recent conference when he said, "CRM is dead." Siebel later explained that he was simply theorizing on the promise of Web services. But it can't bode well when the man credited with founding CRM questions its viability.

Analyst Nelson admits times have been tough for Siebel, but that the CRM giant has yet to be slayed.

"In relative terms, Siebel is the Maserati and these [competitors] are still trying to get out of first gear," Nelson said.

FOR MORE INFORMATION:

Read about reference customers slamming Siebel

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