Has SAP Finally Caught Up to Siebel?

AMR Research today released a new report detailing the current state of the CRM software market. According to the report, for the first time ever SAP AG has equaled the revenue share of perennial market leader Siebel Systems. The study, entitled "The Customer Management Applications Report, 2003--2008," includes one table that lists vendors according to revenue derived from CRM software. In it both SAP, which has $8.8 billion in overall revenues, and Siebel show about $1.3 billion in CRM revenue. But the numbers alone don't reveal the whole story. "It's not a question of what SAP did right or what Siebel did wrong," says Denis Pombriant, managing principal at Beagle Research Group. "[Siebel] is a CRM-only company and reporting CRM revenues. SAP is reporting from a market basket of products--and reporting allocation, as opposed to real numbers." Siebel actually comes out slightly ahead in the AMR report, but by only a few million dollars. As Pombriant notes, "the numbers are so close, you have to look at secondary factors, such as exchange rates," he says. "[Exchange rates] went to hell in a handbasket for U.S. companies last year." John Grozier, vice president of CRM product marketing for SAP, says the AMR results are spot on. "It's a pretty accurate assessment of what's going on in the marketplace right now," he says. "We've been on this relentless march over the past three or four years to attain revenue market leadership. We enter markets to lead them-- and revenue leadership is how you get there." Siebel, not surprisingly, takes a different view of AMR's findings. "There are certainly a lot of ways to look at market leadership," says Jeff Pulver, vice president of worldwide marketing. "Just purely looking at revenue is only one way." According to Pulver, full-suite vendors allocate revenue into various "buckets" of functionality that may not be parallel, and that currency conversion for firms based outside the United States (such as SAP) can skew results. Grozier says he doesn't find Siebel's position all that compelling. "It's not an interesting argument," he says. "Revenue is one standard that everyone can agree on. We're all public companies and all required to report our revenue the same way." He adds that SAP has "vetted" its reporting with financial analysts, and there have been no complaints. "Unless the industry comes up with a better way for us to do it, we're going to keep doing it the same way," he says. But according to Pombriant, SAP's numbers--more than any other leading vendor's--reflect software that no one's using. He cites a recent report by Credit Suisse First Boston that according to Pombriant said that only about a quarter of mySAP CRM users are deployed after a year, and only 50 percent are deployed after three years; the rest of the industry sees rates of 90 percent after one year and nearly 100 percent after three. SAP, he says, "is selling the software, but they're not implementing the systems. There's a ton of shelfware." Laura Preslan, research director at AMR Research and the primary author of the report, says that the report shows precisely what it says it does--no more, no less. "As a market-sizing report, the numbers in this report reflect what has been purchased, not what is implemented and live," she says. "Siebel remains the CRM thought leader, but SAP is now number one from a revenue perspective." Preslan does agree, however, that even AMR doesn't see universal uptake of SAP's CRM software. "The majority [of mySAP CRM 4.0 customers] have paid for the licenses, but have not yet implemented the products. We estimate that roughly 35 percent of [those] licenses that have been purchased are live." That, according to Siebel's Pulver, means the report doesn't really make an apples-to-apples comparison. "When you're at a company with 2.36 million users, and the [competition] may have...150,000 users, it's hard to compare those figures in terms of penetration to ours," Pulver says. According to Pulver, Siebel is the leader in the industry by the number of live users and the number of accounts. By any measure, Siebel and SAP loom large over the CRM landscape, with the two owning more than a quarter of the industry revenue share--more than their 13 closest competitors combined. But PeopleSoft Vice President for CRM Product Marketing Steve Roop says that there are other ways to measure penetration in the marketplace--and that PeopleSoft comes out on top by at least one of them. According to the AMR survey cited in the report, 29 percent of respondents said they had deployed either PeopleSoft or J.D. Edwards (now PeopleSoft EnterpriseOne) -- more than any other single vendor. The report also shows a 61 percent year-over-year revenue growth for PeopleSoft, thanks in large part to its acquisition of J.D. Edwards. Citing company policy, Roop declined to break out how much of that revenue spike came directly from the acquisition and how much was from organic growth. Despite PeopleSoft's gains, Grozier still thinks Siebel and SAP are the ones to beat. "On a rolled-up basis, it's probably down to the two of us for the long haul," he says. However, Pulver thinks the field is a bit more open: "We take all of our competitors very seriously. We [don't] see our competition as a two-horse race." Related Articles: The 2003 Market Leaders CRM 2002 License Sales Down 25 Percent