SIEBEL SYSTEMS

Analysis

Questions

1. Why did CRM applications develop initially as separate and often stand alone un-integrated applications and why did that change?

Questions

2. What made Siebel Systems successful in the sales force automation and the customer relationship management software markets?

Questions

3. Who are Siebel Systems actual and potential competitors in the rapidly evolving CRM space. How would you assess their potential impact and Siebel Systems competitive responses?

Questions

4. What is the impact of the internet on customer relationship management systems and software suppliers. Is the evolving internet environment a threat, an opportunity or both. Please analyze. How should Siebel Systems' strategy change or adapt?

Facts

• Adapt to new e-business environment

• Number 1 in fastest growth

• Number 1 in CRM: $2.3 billion of 16.8 billion

• Focus on future strategic challenges

Facts

• Companies are shifting focus in IT from internal processes to external ones

• The internet is changing the relationship between customers and companies

• success of company depends on it• “100% customer satisfaction” slogan for

Siebel

Facts

• Technology affected customer relationships– Banks with ATM machines– Telephone and telemarketing– Databases– Internet provides more info and choices

Facts

• Open channel communication in internet destroyed “structured channels”

• Companies have to be prepared to do business anyway customer wants

• CRM technology emerged from enterprise software to figure relationships

CRM software

• Sales Force Automation• Customer Service and Support• Not integrated: sales separate from

customer service• Information about all relevant customer

information in one screen• Internet interfaces are easy• Ease of Updating computers

CRM

• Web gave customer power: once click away is another company

• Web-based computing is different than client-based computing

• Need to maintain “look and feel” of product: lower cost for corporations

Tom Siebel

• Worked for Oracle

• OASIS - Oracle Automated Sales and Information System was “hot”

• Oracle did not want to market it

• Siebel left and made money in new software startups

• Started Siebel with Patricia House

Start-up

• Company financed to get product out fast

• Team interviewed companies to find out needs

• Optimized systems for new servers

• Strategic relationship with Andersen Consulting

Partners

• Major partners included– Microsoft– Cambridge Tech Partners– Deloitte and Price Waterhouse– More than 250 partners

Growth

• Leader in Sales Force Automation market within 21/2 years

• Strategy of tradeshows and high visibility presentations

• Respect for the customer

• Develop the human capital necessary for growth

Markets

• Consolidation of SFA and Customer support functions

• Siebel acquires Scopus making it the largest company in CRM but only 5% of potential customers used CRM and many more to go….

• Product evolution was fast

Marketing Strategy

• Customer satisfaction

• Customer references (customer saying good things about you..)

• Respect for customer: no shorts, food on desk, etc.

• Different than other Silicon Valley companies

Product line

1. Enterprise Products

2. E-business Products

3. Mid-market Products

4. Tools

5. Products for Individuals

6. Services

Competition

1. Established top-tier CRM firms: Vantive, Clarify and Baan

2. Smaller, second-tier CRM firms

3. Developers of “e-business applications,” including numerous start-ups; and

4. Major ERP firms: SAP and Oracle

Issues Faced - Challenges

• Make the customer successful at a high level of professionalism

• Keep pace with CRM market

• Oracle and SAP have huge resources to compete

• E-business developers were competitors

Lessons Learned/e-commerce

• Internet has changed the way businesses work:– Open channels of communications– Customer relationship management– Your competition includes the traditional

ones as well as others: Siebel’s competitors are applications developers

Lessons Learned/e-commerce

• Market moves fast and the successful companies are the ones that anticipate change

• Importance of right personnel working for company

Lessons Learned/business

• Strategic Alliances: with companies that are in different field that can refer customers to you (and you to them!)

• Analyze customer needs before you build product

• Change product as market and customer needs change

Lessons Learned/business

• Know your competitors: analyze their strengths and weaknesses

• Siebel everywhere: on every platform with 100% satisfaction

• Finance company by revenue and not by borrowing

Problem facing Siebel

– How can Siebel stay in the high growth mode

– Need to get more employees accustomed to Siebel’s culture and company ideals: no jeans or food on desk, etc

– How can one maintain that?

Options to solve current problem

• Anticipate growth and plan for hiring before you need it: give new employees time to absorb company culture

• Build relationships to universities or headhunters

• Psychological exams to pick right people

Pros and Cons

• Anticipate growth– Pros: have time to execute hiring with no

more than 10% of total employees as new to get the new ones accustomed to company culture

– Cons: might need more and cost (real and reputation) could be high if growth does not materialize

Pros and Cons

• Build relationships to universities and head hunters– Pros: get a large number of fresh talent– Cons:

• could be a long term proposition and not available for short term,

• requires nurturing, ..

Pros and Cons

• Psychological exams– Pros: easy– Cons:

• how good of a profile does it create?• mistakes if people answer questions

untruthfully, etc.

Recommendations

• Short term:– Hire 10% new employees using

psychological exams to get by with new growth, speed acculturation process thru use of mentors, etc

– Start relationships to get new talent

• Long term:– Build relationships to universities