Competition? "None"
Siebel Systems CEO Tom Siebel sizes up the market, his new management team and the competition (or lack thereof).
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In the SFA world, when Tom Siebel speaks, people listen. And when Siebel Systems, the customer relationship management megacompany he cofounded and runs, targets new markets-in this case the middle and low-ends-the competition gets nervous. In the following interview with SFFA Business Editor Douglas McWhirter, Siebel discusses his company's growth strategy in these markets, the future role of the Internet in CRM and the competitors who don't keep him awake at night.

SFFA: Your management team has many new members. Were they hired to take Siebel Systems in a new direction?
Siebel: We have been undergoing very rapid growth. We've become the fastest-growing applications company in history. We are expanding the breadth and depth of the management team to basically continue managing growth, with the quality with which we've managed growth we have had in the past.

SFFA: How do you see the front-office market evolving over the next three years?
Siebel: I think we'll see a very, very dramatic expansion into internetworking computing models and the convergence of front office with e-commerce, e-sales and e-marketing. We are going to see more ubiquitous deployment. We won't be deploying just on the Internet or the intranet, or just browsers, or just handhelds or in client/server. The ubiquity will be in the teamwork of deploying these applications everywhere: in the home, in businesses. We are going to see the boundaries of the systems expand. Historically, in these systems the customer was external to the information system. I think the customer in both the sales and service networks will become part of the information ecosystem, and we'll see virtual communities develop where consumers, sales people, service people, distributors and partners all interact in real time on a 24 by 7 basis, focusing on making sure the customer is successful in his use of the products and services.

SFFA: How important are the middle and small markets to you?
Siebel: We are the world's largest provider of customer service applications. We are the world's largest provider of sales automation applications. We are the world's largest provider of marketing automation applications. We are the world's largest provider in the high end of the market, in the middle end and in the low end of the market. We have been focussed on the middle and low end of the market for a little over two years now. We have become the world's largest provider in every one of these markets, and we will continue our focus on all three segments of the market.

SFFA: How will a company as big as Siebel maintain the flexibility necessary to quickly meet the challenges of this market?
Siebel: We are divided into individual business units. We have seven product lines and over 100 products. Each of these product lines and each of these product divisions is run by basically a general manager of that business, and that general manager basically is a CEO, responsible for designing, specifying, quality-assuring, delivering, selling and ensuring that the customer is satisfied. This has enabled us to come to market very quickly and very successfully and act in many ways like a lot of small entrepreneurial companies. All of these companies, however, are based on the same user interface, architecture and Web-based business model and Web-based product model. This has been a very successful means of allowing us to do a lot of things simultaneously and execute them quite well.

SFFA: How will middle- and small-market companies afford Siebel's products and services? Will your middle-market strategy include lower prices for smaller companies?
Siebel: We have, to date, Siebel Sales, the world's leading sales automation application, and every salesperson in the world who wants to use it can use it for free. You can download it over the Web. That's a pretty reasonable price point, even for the smallest companies with the smallest budgets.

SFFA: Your software giveaway has some mid- and small-market vendors nervous. Some tell potential clients that Siebel is a huge, one-size-fits-all application, and that smaller companies are more attuned to a customer's needs. How do you respond to that claim?
Siebel: Well, I don't think it is an accurate reflection of the facts. Our products are in fact highly customizable and are tailored every day to meet the very specific needs of small, medium and large organizations. The market data and our customer satisfaction levels suggest that in fact our products are very well-enabled in this area. I think this is a fairly weak retort to our initiatives.

SFFA: With 65 percent of the high-end market share, have you run out of Fortune 1000 companies to sell to?
Siebel: I think the market might be 5 percent saturated to date.

SFFA: Who is your biggest competitor?
Siebel: If we look at our list of competitors, the largest competitor we have is "none." The second largest competitor, I think would be Vantive, which we see with about 14 percent of our opportunities. The next would be Clarify, which we see with about 11 percent. The next one would be Baan, which I think we see with about 8 or 9 percent of our opportunities. After that, it fractionalizes with a couple here and a couple there.

SFFA: Do you see Oracle as a potential threat?
Siebel: Oracle is not a viable competitor today. They have not been historically a viable competitor. If they are successful in bringing to market a functionally complete, robust product, then they might be a potential threat. In the last few years they have demonstrated that they are very adept at writing news releases and at advertising, but they haven't been very effective in building a product to meet the needs of the market.

Notable Quotable

"When you have an individual filling a prescription at the drugstore, and the information is immediately downloaded into a computer network and then sold to the marketers of other medicines, that patient's privacy has been ravaged. And it's not fair, and it's not right."

--Vice President Al Gore

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