IBM: Clock runs out on massive Siebel implementation, enter SugarCRM

IBM: Clock runs out on massive Siebel implementation, enter SugarCRM

Summary: IBM is leaving Siebel behind for a new CRM system. One analyst argues that IBM's move is the sign of the times for on-premise enterprise software vendors.

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IBM had the largest Siebel implementation in the world and now appears to be diligently unraveling it for SugarCRM and a system called Sales Connect.

Last week at the SugarCon conference, Gary Burnette, vice president of sales transformation at IBM, gave a presentation. In a Q&A session, Burnette reportedly said that Siebel was being tossed at IBM.

The details of Sales Connect are in the presentation embedded below.

JMP Securities analyst Patrick Walravens said in a research note that the IBM move is notable. Walravens said that IBM's move is "yet another indication of the pressure on Oracle's application business."

Connecting the CRM dots, Walravens said that it's likely that IBM decided it wanted a new CRM systems a few years ago. This system had to be interconnected with internal and external social networks, feature analytics and give visibility into the sales pipeline. IBM probably looked at the CRM leaders including Oracle, SAP, Salesforce and SugarCRM. Why Sugar CRM?

Walravens said:

During the Q&A, the IBM executive was asked why IBM decided to go with SugarCRM. He responded that there were three factors: 1) the open source nature of SugarCRM was compelling, 2) IBM liked the user interface and look and feel of SugarCRM and 3) IBM liked the flexibility of an offering that could be run on premise -- providing "flexibility in where and how we run it." IBM obviously has a strong technology expertise and might want to control its application in ways that wouldn't be possible with salesforce.com.

We suspect there might have been some other important considerations such as the ability to use some key IBM technologies like Lotus Notes and the IBM DB2 database - neither of which would be particularly well suited for solutions from Microsoft or Oracle. Another factor we think is relevant is the number of integration points for IBM's CRM deployment.

In other words, IBM needed a CRM system that played well with its own forecasting tools---Cognos, SPSS---and plug into its collaboration software.

Walravens added that IBM's move indicates that "the window is closing on the traditional on-premise, license software model -- and that the window may be closing faster that some vendors expected."

That point is hard to argue. All you have to do is notice how on-premise enterprise software giants have gone cloud crazy with acquisitions. But there is another wrinkle to ponder. Why wouldn't IBM just go cloud?

The short answer is that the economics of software as a service don't quite add up for a company as large as IBM. In a recent interview with IBM CIO Jennette Horan, she said that SaaS economics can be tricky at scale. "SaaS doesn't have a lot of scale for us and what we need to do isn't doable through a SaaS vendor," said Horan.

Specifically, IBM has more than 400,000 employees (it stopped disclosing headcount after its 2010 annual report). That's a lot of employees to pay for by the user, said Horan, who noted it's more cost effective to build a private cloud to deliver applications. And even if the SaaS contract can be worked out there's a customization issue for IBM, which operates in multiple countries with various regulations.

Topics: Data Centers, Apps, Cloud, Emerging Tech, Enterprise Software, IBM, Software, Software Development

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7 comments
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  • This is a BIG win for SugarCRM

    Yet another highly-successful, open-source project.

    In addition, this should give SugarCRM a big shot-in-the-arm to grow their business elsewhere.
    Rabid Howler Monkey
  • Compiere + Aras + SugarCRM

    Three open source solutions to address the three biggest functional areas of manufacturing IT...resource planning, product lifecycle management and customer relationship management. Give me open source equivalents of AutoCAD and SolidWorks and we've got the IT stack for the factory of the future.
    jasonp@...
  • Siebel

    I was actually the Siebel Technical lead for this project from 2000-2002. Big massive implementation across 3 geos. I know Gary from those days. Interesting selection of SugarCRM.
    TahoeBlu
    • Siebels future

      When do you predict Siebel going towards end-of-life?
      davey8888
  • Ooh, this should be good...

    How will spin-doctor Ellison twist this one? Dismissive? Minimize? Trivialize? Criticize?
    kchieff
  • Siebel angle is sexy, but SugarCRM-IBM has more substance

    .
    Hi Larry,

    I was the analyst who asked IBM VP Gary Burnette whether Siebel would be displaced by IBM's putting SugarCRM at the core of its next generation internal - and eventually productized - CRM infrastructure. Here is a link my analysis:

    http://ovum.com/2012/05/02/sugarcrm-becomes-the-core-of-ibms-next-generation-crm/

    In addition to this Ovum Opinion, I have published a detailed Analyst Insight on the SugarCRM-IBM partnership. This is a client only research report, but I can have our PR team share it with you. Please drop me a line at carter.lusher [at] ovum [dot] com if you would like a copy or to chat about the implications of the IBM move.

    Cheers, -carter j

    Carter Lusher
    Ovum
    Research Fellow & Chief Analyst, Enterprise Applications Ecosystem

    http://ovum.com/authors/carter-lusher/
    .
    carterlusher@...
  • IBM - lousy CRM surfaces many company issues

    I have to take exception to this article - I've been an IBM employee and - unfortunately - a Siebel user for many years.
    I was there when it was implemented many years ago (technically impressive implementation, but also very complicated), and I have been using it there for many years. In a word: awful.
    The most important aspect of choosing a CRM tool is usability: the field sales force has to see it as a daily use tool and it has to be something that actually helps them sell. And not just UI usability, but an important tool for them that helps them keep track of their pipeline. They have to want to use it, and it has to be a pleasure to use: that's the only way sales people will add the necessary data to reflect their sales pipeline and progress. Only then can management get the data that they need. Unfortunately, the Siebel tool is as poor as it gets in this regards. Its usability is just terrible, and IBM field sales reps hate using it. And it's not just "grin and bear it" to get your data entered - the performance is terrible, there are endlessly multiple screens, duplicate customer records galore, all sorts of fields that don't work or don't apply, entire sections of the interface that are not only too complicated but which aren't even usable. And a lot that doesn’t work at all. All this despite a really well-done training program.
    And that’s not all. Because of problems rolling up the data into any kind of management dashboard, IBM sales management has created a tool called “ASFT” which has become the defacto sales tool as well as the management tracking and dashboard tool for management. It pulls data out of Siebel every couple of days thru a horribly complicated process, then each field sales person has to update it to make sure it reflects their actual pipeline. So all of the data is initially duplicated in two places... and then quickly gets quickly out of sync. Sales management then tends to update to reflect their own commitments rather than the realities of the actual sales person’s pipeline. Oh, yes, ASFT requires a release of Excel 10 years old. So, IBM is running it sales process on Excel!
    This is a mess. Worse yet, because Siebel is so difficult to customize (and then to update), the interface is essentially the same as it was ten years ago. No progress.
    Don’t even mention any kind of interface with Lotus Notes. Everybody hates that as well, and it’s even slower to use than Siebel. Do you get the idea that the IBM field sales force is poorly equipped? Is there a connection to the recent lousy sales results?
    The SugarCRM story hasn’t begun well. As the story goes, the only reason that Salesforce wasn’t chosen was because an IBM exec who joined Salesforce left IBM on bad terms. And now the SugarCRM implementation has been repeatedly delayed. It’s started use in Europe, but not North America. Where it was supposed to be a year ago. When the sales force was first told that we were abandoning Siebel a year ago, there was wild clapping. And then silence for a year as the new solution as repeatedly delayed.
    So Gary can put all the spin he wants on this, but couple it with a top-heavy (and often dysfunctional) field sales force organization and it’s easy to see another reason why IBM is failing.
    consultant99