Siebel exec says Benioff is 'running scared'

The influence of Larry Ellison is already being felt as Siebel. Bruce Cleveland, who runs Siebel's product group, fired off a caustic letter to the world countering salesforce.com CEO Marc Benioff's abrasive comments about the Oracle/Siebel mating being the deathnell for Siebel. I can imagine Ellison cheering Cleveland on in the background. We can look forward to Benioff's response as well as the chorus of onlookers. What we do know is that Siebel as a company was heading in the wrong direction, and salesforce.com is going in the right direction. But, they are starting from very different places. Now it's time for some fact checking...

Dear Friends and Colleagues,

I couldn’t help but notice how many articles were written earlier this week about Marc Benioff’s email to salesforce.com’s employees on his thoughts concerning Oracle’s proposed acquisition of Siebel Systems. In keeping with his company’s Dreamforce theme, Marc seems to be dreaming big, hoping that the fabricated tales he spins become facts. Sadly, for him, they’re simply not true. Let me illustrate.

Marc infers that salesforce.com has been putting Siebel customers out of their misery for years. Yet, Siebel Systems has added more than 500,000 ‘live’ users of its CRM applications since the beginning of 2005, while salesforce.com has added approximately 100,000 subscribers. And our win rate in OnDemand software versus salesforce.com was approximately 58 percent in our most recent financial quarter. While Marc may covet Siebel’s customers and has won a few of them, these have been SFA deals – not Business Analytics deals, or self-service deals, or customer order management deals, or customer data integration deals. You get my point. Marc is not in the same league as Siebel Systems in terms of the breadth of solutions we provide for leading organizations worldwide.

He keeps repeating the mantra, “It’s the end of software.” Well, if this is the case, somebody had better tell the tens of thousands of developers at IBM, Microsoft, Oracle, Computer Associates, Google, Yahoo!, and salesforce.com that they need to change careers – not to mention the hundreds of thousands of custom developers at private and public sector organizations. Is Marc implying that there is no need for software developers and that he has no software developers at HIS company? This is an inane statement.

Marc implied that Siebel Systems sells client/server software and that, with its acquisition announcement yesterday, “client/server software is being consolidated by Oracle.” The fact is that Siebel Systems’ last release of client/server software was in 2001. Marc may want to spend less time on the Big Island and more time studying his competition.

Marc wrote, “Siebel On Demand (sic), a joint venture between Siebel and IBM, will be the first to be buried. Siebel On Demand is written exclusively on DB2 and Websphere and runs in IBM data centers..” Actually, Siebel CRM OnDemand is written on Siebel 7.5.3, our market-leading suite of CRM applications. Siebel 7.5.3 runs on virtually any application server and any database. And Siebel CRM OnDemand can theoretically be hosted by any hosting provider. Now, given our close partnership with IBM, we have chosen to run Siebel CRM OnDemand on DB2 and on WebSphere, and to use IBM’s world-class hosting services. But there is no technical linkage that precludes us from working with other companies.

Regarding Marc’s remarks that Oracle will “kill” Siebel CRM OnDemand, I point you to the replay of the press conference call conducted by Oracle at 5:30 a.m. Pacific on Monday, September 12th announcing the acquisition (1.866.357.4207; int’l: 1.203.369.0123 – Passcode: 6524). Here is what I heard Larry Ellison say word-for-word,

“We think OnDemand is going to be increasingly important. We think the Siebel OnDemand products have -- are improving at a very, very rapid rate and we intend to invest in them heavily. In fact, we expect that all of the Siebel product features and functions that they have in the software products will migrate to the OnDemand products. So we think that is again a very important asset that we want to preserve and invest in as the acquisition is concluded."

So what’s really going on here? It’s easy. Marc is running scared, and when he runs scared he attacks. Pending the successful close of the proposed acquisition announced Monday, Marc will face the following large and well-funded competitors in the next several months: Microsoft – which last week announced it will enter the hosted CRM software market, SAP – which has also announced it will enter the hosted software market, and Oracle. He will also face increasingly hungry and aggressive competition from smaller companies. For example, last Monday NetSuite put out a press release announcing that more than 100 companies have switched from salesforce.com to its products.

Let the fun begin!

Bruce Cleveland,
Senior Vice President, Products
Siebel Systems