Siebel Buys edocs for $115 Million
In a move described by company CEO J. Michael Lawrie as furthering his company's mission "to help companies unify their systems, their processes, and their people and partners around their customers," Siebel Systems announced that it has acquired electronic billing systems provider edocs for $115 million in cash. The move surprised industry analysts--Siebel Systems and edocs already had had a partnership for the past several years.
In a conference call with analysts after the announcement, Lawrie was effusive about what the deal adds to Siebel's portfolio of offerings. "By acquiring one of the leading players in this space, Siebel Systems will be positioned to capitalize on the growing $3 billion market for e-billing and online self-service," he said. Calling online self-service "the fastest-growing customer-care channel, [and] a top investment priority across many industries," Lawrie said the acquisition "will become the only CRM vendor to offer CRM, business intelligence, and
Lawrie stressed that the move is in line with the company's renewed focus "to provide a broader range of front-office solutions and services that deliver a demonstrable business result for our customers," adding that the deal is "consistent with Siebel's strategy to make selective acquisitions that complement and strengthen not only our existing offerings, but also deepen our capabilities in key industries and verticals." Edocs, he said, "has proven solutions that deliver fast and strong return on investment to its customers." Lawrie said that within the CRM industry, self-service technology "provides the greatest leverage for growth and competitive differentiation."
"It's a potentially positive move for Siebel. There's always been a little bit of a gap for Siebel in the billing and service area. This [acquisition] will help them with that," says Denis Pombriant, managing principal at Beagle Research. "Over the long term having the imaging technology in-house that edocs represents will allow them a lot more options in terms of service perspectives."
The expanded capability may also open doors "across a broad range of industries," he adds. "Siebel immediately gains a lot in areas like telecommunications and older utilities." It also extends Siebel's reach into the financial services area, including credit cards and, eventually, check processing, Pombriant says.
The competition for front-office CRM is expected to be fierce in the coming years, and the integration with functions like billing has been an ongoing battleground. "We welcome Siebel," says Charles Born, vice president of global marketing for Amdocs. "Even if they are three years late to the table."
Born agrees, however, that this was a much needed boost for Siebel. "E-billing rounds out the customer experience," he says. "Edocs just offers...online billing, [but] that works for Siebel, because they didn't have anything."
Siebel's attraction to the billing sector is not new. In early November Siebel had signed a strategic partnership agreement with Avolent, a provider of financial relationship management software, intended to help customers automate the financial processes within their customer-facing systems. Avolent CEO and president Doug Roberts tells CRM
magazine that the edocs acquisition "was a great move for both companies--particularly for Siebel." Siebel, he says, "needed a response to Amdocs within telecom, [especially] in terms of being able to get financial information from the invoice into the hands of customer-service representatives and account managers."
The deal is slated to close in the first quarter of 2005, pending shareholder and regulator approval. In addition to an expected one-time charge of $8 million to $10 million in acquisition-related expenses, the move will reduce first quarter earnings by about a penny per share. Additional payments, above the initial $115 million, may be due to edocs stakeholders in 2006, if the division achieves certain revenue and other performance milestones.
It may take that long before the final view of this deal becomes apparent, according to Pombriant. "This is the kind of move that in retrospect will be deemed to have been significant--inside of the next two or three years." As for other moves by Siebel in the near future, Lawrie told analysts that the company intends to buy rather than build its technology portfolio.
Siebel Caps User Week With Stronger Earnings and Refined Service Offerings
The Week in Review: June 4, 2004
Edocs acquires Brightware; this year's Customer Service Week Web site is launched; and more.
Siebel Systems' New CEO