Siebel: It's all about the share price

The mantra that the customer is king makes for great marketing, but all corporations ultimately answer to their shareholders

All corporations struggle with juggling two competing pressures: keeping customers happy and satisfying shareholders. For marketing purposes customers are frequently portrayed as the more important of the two, but despite this rhetoric everyone concerned understands that it's the shareholders who really matter. Corporations exist to deliver value to their shareholders — customers are a secondary and subordinate consideration.

This status quo was highlighted at Siebel's European user conference this week, when incoming chief executive George Shaheen found himself at his first press conference just days after being drafted into the struggling enterprise-software company. Shaheen replaces Mike Lawrie who was unceremoniously booted out less than one year into the job and four days before the conference was due to begin.

To punctuate the change of management, Siebel has hit on what it claims is a revolutionary new strategy: putting the customer first! It's not clear what Siebel has been doing up to now, but in Shaheen's keynote speech to the software providers' most important customers and partners, the new boss vividly described the new approach with its zingy new tag-line: 'It's all about the customer.'

If only it was. Unfortunately, the reality at Siebel seems more like: "It's all about the shareholder" or "It's all about Wall Street". The decision to remove Lawrie following disappointing first-quarter results, after giving him less than a year to implement the fundamental changes that Siebel needs to get back on track, looks like a decision rooted in fear rather than created with the customer in mind.

By ditching its chief executive when things got rocky financially Siebel has shown that it is prepared to do almost anything to keep its stock strong. Shaheen hinted as much when questioned about a possible takeover attempt from Oracle: "I have a responsibility to do the best for the shareholders," he declared. And where do the customers fit into this exactly? PeopleSoft customers have found out exactly what happens to an acquired company's product roadmap following a buy-out.

Siebel is in a difficult position, sandwiched between Salesforce.com at the low-end and SAP and Oracle at the high end of the enterprise software market, and it will have to do something revolutionary to turn itself around. Vaguely stating that it's going to serve its customers better isn't good enough: real leadership is what's called for. Let's just hope that Shaheen is given more time than his predecessor to get things right.

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