Siebel: It's going to be a B2B bloodbath

SCOTTSDALE, Ariz.--If you listen to Thomas Siebel, the worst has yet to come for business-to-business software vendors. But he says the resulting consolidation will be a good thing for customers and surviving B2B vendors.

Siebel, chairman and CEO of leading customer relationship management vendor Siebel Systems Inc., made his dire predictions during Forrester Research Inc.'s B2B Technology Leadership Forum here this week.

His words came as B2B software stalwarts Ariba Inc. and i2 Technologies Inc. warned of lower-than-expected earnings and widespread layoffs. (When questioned about his own company's earnings projections, Siebel declined to comment.)

His description of the current business climate: "global economic recession."

"If you can't generate profits, significant market share and customer satisfaction, you are out of business," Siebel said.

Siebel specifically cited B2B e-marketplaces and applications service providers as the B2B companies that will continue to be hardest hit. His words were particularly harsh for the e-marketplaces.

"On the B2B exchange side, I don't think anyone will survive. They are all gone," Siebel said.

From 'yes' to 'no'

Technology vendors can no longer count on customers giving them the benefit of the doubt and dabbling in a new technology investment just because of Internet hype, he warned. Where the "default answer" used to be "yes," "the default answer now is 'no,'" he said.

In the long term, that transformation will help, rather than hurt, the technology sector, Siebel said. Companies that deliver products with the most value to customers and that concentrate on customer satisfaction are most likely to survive as customers become highly selective.

In addition, vendors will consolidate, which will help customers more easily wade through what has become an overwhelming number of potential partners.

"When we emerge out of this next shift, the world will be a saner place," Siebel said.

But for now, "You really need to look carefully as you plan who your partners are going forward."