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Siebel Called on the Carpet
A recent study suggests that some customers are not as satisfied as the CRM leader attests; Siebel counters with its own study results.
For the rest of the November 2002 issue of CRM magazine please click here
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Findings issued in a September study from Nucleus Research Inc. have sparked some debate in the CRM space about return on investment. The Wellesley, MA--based researcher claims it began the study of Siebel Systems Inc.'s reference customers to mine best practice information. Instead the study found that customers touted on the Web site as happy actually experienced business results that directly contradicted the CRM software giant's marketing claims of a positive ROI in fewer than 10 months. The study began in June with Nucleus contacting the 66 reference customers on Siebel's Web site offering testimonials of their positive experiences with Siebel and its products. The original premise of the study was to uncover how Siebel customers were achieving a positive ROI. Nucleus then intended to use that information to develop best practice information that would subsequently be sold to its clients. Of the 66 Siebel customers contacted, 23 agreed to participate in in-depth interviews, 12 declined to participate, 31 never responded to repeated requests for interviews, according to Nucleus. More than 61 percent of the reference customers surveyed did not believe they had achieved a positive ROI from their Siebel investment, citing challenges in training and customization. Seventy-eight percent cited a lack of user-friendliness as a challenge to achieving positive returns, while 65 percent cited rigidity and difficulty in customization as a roadblock to positive ROI, the study reports. The report also states that on its Web site Siebel claims that the average implementation allows customers to achieve a revenue increase of 12 percent, an employee productivity increase of 20 percent, and a customer satisfaction increase of 20 percent, each of which contribute to positive ROI in fewer than 10 months. Rebecca Wettemann, vice president of research at Nucleus Research, says Nucleus does not consider the study statistically significant or a sample, but adds that it was not meant to be. "It was just meant as a look at Siebel's best customers," she says. "If anything we thought that would skew the results to the positive."
Those who agreed to participate in telephone interviews Nucleus analysts conducted were asked questions about factors of their Siebel deployment that would impact ROI. These questions included how, why, and when they selected Siebel; how many users are using what functionality; the greatest areas of return; project spending, including software and consulting; customization and deployment strategy; and deployment challenges. "You can't trust the vendor to provide that information," Wettemann says. "Siebel makes some bold claims that aren't true. And they seem to have taken some literary license when it comes to testimonials from Siebel customers. Certainly, when you are looking at reference customers you expect success stories. But the customers that were willing to talk [to us] were very disappointed." Stacey Wueste, senior director of public relations for Siebel, says that all claims and information on the company's Web site are accurate and that all the testimonials had the blessing and approval of the customers prior to being posted. However, the company has taken down all the testimonials until Siebel can reach all 66 customers and verify that they stand by their original claims and comments. Once that process has been completed the testimonials will be reposted to the site. Siebel executives had originally declined to comment on the survey, instead issuing a verbal statement through its public relations firm: "No company would take a report that is based on a statistically insignificant survey of 23 companies seriously," the media relations representative says. "In the past year Siebel has added new customers and maintained a steadfast focus on satisfaction, and according to third-party analysts, has increased its majority market share. Those are the numbers that count--not a random survey that lacks depth, breath, and creditability." According to Siebel, for the quarter ended June 30, 2002, the company added 200 new customers, including Key Energy Services Inc., The U.S. Air Force, and The U.S. National Archives and Record Administration. The CRM software developer also expanded existing deals with 250 companies. Overall Siebel has 2,500 customer deployments. Still, Wettemann says that she has not heard from one customer willing to share positive Siebel experiences. "This is a big company that is charging companies a lot of money and not providing value," she says. The Nucleus Research states that Siebel installations cost $18,000 per user per year, and that reference customers cited exorbitant license, consulting, and maintenance costs as key ROI inhibitors. According to the report, most of the customers surveyed are using only half of the potential functionality from their Siebel implementation, even after an average implementation time of more than two years. Fifty-seven percent of the Siebel customers interviewed said their deployment took longer than planned, while 55 percent said they spent more than originally budgeted. The report says that some customers have opted for a phased deployment strategy to get users comfortable with the solution, but finds that this approach significantly slows the realization of benefits while increasing and extending the costs of consulting, training, and personnel. Wettemann says another surprise was that most of those interviewed for the study had to increase their consulting and personnel investment over time to support their Siebel solution. That is the opposite of previous CRM findings that typically show high costs during the first year and progressively lower costs over time. And while all those issues combined can make for difficult times for customers, Wettemann says a lot can be forgiven if customers feel that vendors are responsive and helping them. However, according to Nucleus, Siebel customers felt the company was not responsive to their concerns. "Some of these customers are frustrated by the lack of ROI, the feeling that they were oversold, and the lack of support from Siebel to correct this," Wettemann says. Siebel's Wueste countered saying that Siebel conducts its own surveys every quarter and has found that of the 879 customers interviewed just 65 percent even measure ROI. Siebel's most recent survey, conducted this past August, found that of those measuring ROI, the median increase in customer satisfaction was 23 percent, median revenue increase was 8 percent, median increase in customer retention was 8 percent, and the median decrease in operational costs was 13 percent. "We feel that is statistically relevant data," Wueste says. "We use these surveys as part of our day-to-day business and as a management tool." --Lisa Picarille Microsoft Brands MS CRM at Stampede With Microsoft Corp. set to burst onto the CRM scene by the end of the year, the software giant used the autumn to harvest input from beta testers, sign up more third-party developers, and announce financing plans to fan the MS CRM fires. At Microsoft's annual partner conference, Stampede 2002, held in mid-September in Minneapolis, the company announced that its forthcoming CRM product would follow the naming conventions of other products from the Microsoft Business Solutions division. The new product will be called Microsoft Business Solutions CRM, according to David Thacher, general manager of global CRM for Microsoft. Microsoft also announced that all the products that fall under the Microsoft Business Solutions division will have financing options. The program, called Total Solutions Financing, provides financing options that cover Microsoft service and software, as well as ISV (independent software vendor) solutions and partner services and software. For CRM users this means they can spread out financing payments over several years, Thacher says. For resellers and partners, this may help in a tough economy, as well as be an incentive to work with Microsoft, which promised to offer competitive rates. In addition, partners will be reimbursed immediately when deals close, Thacher says. Microsoft also used the show to demonstrate the latest beta version of its CRM offering and to inform partners about its training program, which is required just to participate in the beta testing process. Thacher says Microsoft also used the venue to talk with partners about what type of solutions they will provide, horizontal or vertical. Thacher says that to date hundreds of partners have signed up, most focused on the mid-market. He expects hundreds more to commit by the end of the year. Microsoft officials at the show also spent time reassuring attendees that the company's CRM product will be squarely focused on the mid-market. Or, as Microsoft calls it, core mid-market or lower mid-market.
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