Siebel Unveils an SMB Unit

In the clearest sign yet of the fierce competition facing Siebel Systems, the once-unchallenged industry leader, the company announced yesterday the formation of its first SMB business unit. The new unit will employ dozens of salespeople dedicated to serving small and midsize clients, as well as coordinating with global and regional channel partners. Both the on-demand and on-premise application offerings will be handled by the SMB sales force. The new unit is led by Siebel veteran Bruce Cleveland, whose first tenure at Siebel began in 1996. He is best remembered for the formation of the Siebel Alliance Program for CRM partners. In a similar role with a different base of prospects, he is being asked to duplicate that success, focusing Siebel's smaller business strategy once and for all, and convincing potential channel partners that Siebel is a superior fit for their clients over traditional midmarket, channel-driven products from such companies as Pivotal and Microsoft. SMB launch partners run the gamut from such growing regional integrators as eVerge Group to multinationals the likes of IBM and BT. Cleveland announced in a presentation the formation of an SMB customer advisory board. Siebel also plans to create a microsite for SMBs that will offer best practices and other information. Curiously, one of the SMB channel partners, Clear-To-Close, is also on the customer advisory board. Typically, customer advisory groups are used as safe-haven sounding boards for clients, rather than additional exposure to channel partners. Formally setting one's sights on the midmarket is practically an annual ritual for many CRM developers, Siebel included. Analysts routinely declare it a rich opportunity, and Siebel estimates that at least 80 percent of the North American small-business market has not adopted CRM. "I really don't believe that the midmarket is saying no to CRM, I believe they are saying no to the complexity and cost of what is on the market today," says Elizabeth Roche, vice president at META Group. Siebel is so far taking a cautious approach to building its SMB partner program, saying it only intends to work with elite resellers that meet rigorous standards. Roche believes that while that approach will work well for more demanding midmarket engagements, it may prove a limiting factor if Siebel intends to serve the entire business community. "For $350 million to $500 million [clients], a sophisticated channel works. If you go down to the $10 million to $20 million businesses, that's a different strategy altogether," she say. "Now you're getting into CompUSA." Siebel's new approach is as remarkable for what it does not entail as for what it does. No software is being created or rebranded for the effort--Siebel believes it has the right products for the market, and intends to reach its targeted customers through new channels. "They're not saying it is a new product, they're crafting a completely different go-to-market," Roche says. "The story here is the organizational infrastructure." Related articles: Midmarket Champions It's Not Business As Usual