Siebel Caps User Week With Stronger Earnings and Refined Service Offerings

Siebel Systems kicked off a flood of information at its annual User Week with news of better-than-expected sales. Wall Street saw Siebel recording $306 million this quarter, but the company gave guidance that revenues would be in the range of $315 million to $317 million. The unexpectedly strong business represents performance above financial analyst expectations, but not above Siebel's own track record--the company logged more than $321 million in business in the same quarter last year.

The company hyped this year's conference as new CEO Michael Lawrie's first chance to meet the customers as a group. In his keynote he repeated a theme Siebel has been advancing for months--that he would take not only Siebel, but also the CRM industry into "Chapter 2."

"[Chapter 1 was] to build the best software and deliver it. That is still important, and we will continue to do so. [But] CRM is not an event or product, it's a business strategy," Lawrie said in his keynote address. "It's about process, people, methods, and best practices, and the intersection of these that is the new equation that will deliver the business outcomes we are all looking for," positioning Chapter 2 as focused on how organizations can derive value from their investment in CRM technology.

Denis Pombriant, managing principal at Beagle Research Group, says this is no overstatement. "It has taken 10 years and a complete rewrite of every [CRM] application that was around in 1995 just to get to the point where we have real-time analytics, embedded business rules, and everything talking to each other. From that perspective it really is Chapter 2."

Lawrie rejected any notion that customer-facing processes could not create significant business improvement. "The front office is a source of great leverage as you go forward to drive revenue growth and differentiate the customer experience," he said. "The front office is the next frontier of business value."

The company showed awareness that its once-unchallenged position as the CRM leader has come under significant pressure from vendors such as SAP, PeopleSoft, and Oracle. Lawrie said Siebel and its partners still have a great deal of work to do to ensure that their customers are getting value from its systems. According to SatMetrics, 48 percent of respondents said that their Siebel implementation met expectations; 41 percent said it hasn't yet fully met expectations. While Lawrie and others in the industry point out that dissatisfaction is often born of mismanaged expectations, he acknowledged that changes needed to be made.

One surprise is that in addition to focusing on both the vertical and horizontal expansion of the existing on-premise and on-demand versions of its software, Siebel will be more open about engaging with high-end clients who want entirely custom systems designed around Siebel's CRM platform. "Rather than view custom builds as a competitor, we will view them as another opportunity," Lawrie said.

Siebel's internal services organization is expected to provide a better end-to-end experience to customers, reorienting itself around a six-step "Customer Experience Blueprint" (Understand, Envision, Define, Build & Deliver, Confirm, Operate & Optimize) the company says is based on best practices learned from over 4,000 implementations. "What they're trying to do with this blueprint is not take over the services end, not become a services biz, but to have sort of a songbook that everybody--meaning Siebel, Siebel partners, and end users and customers--can read [from] and be on the same page with," Pombriant says.

"We're going to change the game. We want to set the standard for how you do CRM," Eileen McPartland, Siebel senior vice president of global services said, "but it's all about how the customer wants to work."

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