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Siebel's future: So much depends on the UAN

Siebel's UAN is a critical piece of the CRM giant's competitive strategy. But where is the UAN?

Siebel is a dazzling company. It makes big claims, provides big applications and plays hard against its competitors. It also is the only CRM applications company (it is not an enterprise applications company, as it claims to be) that Gartner Inc. ranks as the leader in 11 categories -- pretty remarkable by any standards. Siebel is simultaneously the most sought-after and the most reviled of all CRM companies because of its huge success over the years and because of its "ugly Siebelian" corporate personality.

But Siebel is not just big, it can also be sleek and savvy. Take, for example, one of the company's smarter products -- the Universal Applications Network (UAN), the highly touted, sort-of-visible integration framework. To Siebel, it is far more than just an integration framework that the company can sell -- it is a crucial strategic piece of the "new Siebel" that Tom Siebel announced at the 2002 user conference -- the friendlier, faster, easier-to-use, simpler, well-integrated Siebel that customers have been interested in all along.

The UAN is, simply put, Siebel's middleware, but at an enterprise-process level. It is a smartly thought-out application framework that allows business process integration among disparate applications and Siebel tools, but it is system independent. What makes it interesting is not so much the framework itself, since several vendors, notably PeopleSoft and SAP (with xApps) have similar frameworks. But Siebel has done two things with the UAN that are very important.

First, Siebel has announced dramatic improvement with UAN 2.0 by adding 50 industry-specific process-driven integration applications. These are focused on nine industries: automotive, communications, media, energy, financial services, insurance, health care, high tech and manufacturing. So, for example, Siebel would provide an application to link Siebel software to processes like Financial Services Account Origination Management or Automotive Dealer Service Information Management.

In light of the company's newly formed commitment, with Siebel 7.5, to a business process-focused CRM suite, having an integration framework with this kind of vertical specificity is pretty smart.

Second, and perhaps more important, Siebel has developed strategic partnerships with key players in the industry, a crucial initiative in a fresh new customer-driven ecosystem that includes competitors like SAP, Oracle and PeopleSoft -- actual enterprise applications companies eating up large chunks of what was previously Siebel's protectorate.

For example, in the enterprise applications integration (EAI) world, Siebel has established critical relationships with IBM, BEA, SeeBeyond, Tibco, Vitria and WebMethods. The IBM partnership is global and strategic and the only one that Siebel has in the application integration space at this level. Siebel licensed IBM's prebuilt business process templates and common object models so that integration costs come down. Siebel's also tying itself to integrators like Accenture, Bearing Point, Deloitte, CGEY and IBM Global Services to drive UAN implementations. In other words, it is moving to quickly drive revenue from the UAN and penetrate markets -- particularly SAP's -- even more deeply, using UAN as a marketing and sales tool, not just an integration framework.

But where is the UAN? Well folks, "still fluff" is a solid working definition, even though Siebel claims to have 2.0 available. For example, the UAN connector for Microsoft is actually for version 8.0 of Siebel, which promises business processes published as Web services. A good thing, but still in the future. Still, Siebel admits it has only 20 "charter" (meaning version 1.0) customers for the UAN. The company seems to be having some difficulty selling the concept, though I'm not sure why.

Siebel's going to need a UAN to help alter its financial direction. The company's software license business went from a $246 million in the first quarter of 2002 to $112.1 million in the first quarter of 2003, and it's declined for five of the last six quarters. While this was not unusual for many CRM companies, given the economy, for a company like Siebel, this was a look at a steep canyon that wasn't there last time they looked down. Siebel's stock, which, in the heady days of the economy traded at over 100, is now trading below 10. The company has been the subject of multiple lawsuits and Securities and Exchange Commission inquiries that aren't helping shareholder value much.

All of this should give you pause as a customer or potential customer of Siebel. I'm not saying don't use Siebel tools, but I am saying tread carefully, because the things Siebel needs to reverse its decline, like the UAN, are not quite there yet.

What do you think?  Send us your comments about the future of Siebel and the UAN.

Paul Greenberg is President of The 56 Group, LLC and author of CRM at the Speed of Light (McGraw-Hill, 2002).

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