Siebel 2.0: The end of Salesforce.com

Siebel 2.0: The end of Salesforce.com

Summary: It’s finally time to call a spade a spade, or in this case, a soon-to-be has-been a has-been. Of course, doing so after the fact sounds too spiteful, so I’m going to do it well ahead of the curve.

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It’s finally time to call a spade a spade, or in this case, a soon-to-be has-been a has-been. Of course, doing so after the fact sounds too spiteful, so I’m going to do it well ahead of the curve. While these kind of predictions are hard to get right, I think I’m calling this one correctly, based in part on a similar call I made five years ago.

My prognostication is about Salesforce.com, and here goes: Salesforce.com is the next Siebel, the next CRM has-been, the next low-priced software buyout opportunity, unless somehow the company gets sold before its stock begins to tank or it engineers a remarkable turnaround from its current moribund strategy. It may take a couple of years, and there may be some big blockbuster announcements and a couple of good quarters in the interim, but it’s gonna happen, and it’s gonna be ugly.

I had a similar epiphany (pun-intended, all you ex-Epiphany customers and shareholders know what I mean) about Siebel way back in ’02 (and Epiphany from the get-go, BTW). Remember Tom Siebel, the man “who could see around corners” (at least according to a glowing cover BJ from Forbes). Sometime in mid-2002 I started seeing three problems with his business model, all of which seem to be repeating themselves five years later with respect to Salesforce.com

1) Siebel’s claims to deep integration with the rest of the ERP stack were exaggerated. This lack of integration made it much easier to rip and replace Siebel, and therefore left it vulnerable to… 2) An increasingly robust set of offerings from SAP and Oracle: while not necessarily as robust as Siebel, the value of out-of-the-box integration greatly exceeded the Siebel’s best-of-breed value-add. 3) The lower-cost Salesforce.com model was looking like a much better deal than high-priced Siebel, particularly considering points 1 and 2.

You could almost do a search and replace with Salesforce.com and say exactly the same three things. SF.com doesn’t have a critical mass of customers doing deep integration, and competitors like SAP and Oracle, and now Microsoft too, are all offering deep integration to their respective software stacks in addition to coming out with on-demand CRM offerings. Point 3 above holds true, with the following difference: now deep integration can happen in the context of an on demand model for SAP, Microsoft, and Oracle customers, and therefore all of SF.com’s strategic differentiation has been lost (including App Exchange, which I’ll tackle in a moment).

There was a final problem with Siebel, which I related in a series of columns, that has an unfortunate parallel in the person of Marc Benioff, SF.com’s CEO and chairman and head cheerleader. Tom Siebel was telling tall tales about his company’s user satisfaction ratings at every quarterly financial call, claiming 90+ percent satisfaction in an industry that has never, (and will probably never) achieve those figures. A little sleuthing on my part turned up the smoking gun: a rigged survey question that made it virtually impossible to give Siebel a negative report card. (See this column for the initial report and this one for details on the bogus survey questions.)

The parallels, unfortunately, regarding Marc’s claims for App Exchange, his one strategic ticket out of his current mess, are a little too similar. Marc has been making lots of exaggerated claims about App Exchange, the value of the VC money that has been thrown into App Exchange, and other issues regarding how well his company is really doing. I’ve written some about this, others like Phil Wainewright have weighed in, and a few more in the blogosphere (Sinclair Schuller in particular) have also noted the credibility gap that Marc is building for himself.

So how can I be sure that Salesforce.com is the next Siebel? To be sure, I’m more ahead of the curve today than I was in 2002. By the time my second column had come out on Siebel’s survey hooey, the wheels were already falling off. Whereas SF.com probably has a couple of good quarters left in it. But the wagons are circling, and so far Marc’s only chance for turning things around is so unsuccessful that he’s resorted to bluster and BS about what’s really happening.

Maybe we’d all do the same if we had a few hundred million smackers to protect, but instead of bluster I think a little strategic realignment is in order for Salesforce.com. And don’t think a consumer giant like Google (which has no innate understanding of the enterprise software market), and its poor excuse for an online Office suite, can rescue SF.com. It’s going to take a lot more than that to keep Oracle or the repo man (Infor, Epiphany’s new owner) from buying up the resulting mess in a fire sale. Marc had better start now, before it’s too late.

Topic: Enterprise Software

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17 comments
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  • I guess I'm not part of the 90%

    My company uses Siebel. It may be good for selling refrigerators, but it it HARDLY even ADEQUATE for complex, multi-month rollout cycles of IT gear, software and services.

    I'd be better off with post-it notes and Lotus 1-2-3 v. 1.0.
    JackPastor
    • Options

      Or Salesnet, which does a REAL job of helpong to manage complex sales cycles, much better than SFDC.
      ianhendry
  • sf.com survives

    interesting assessment. however, you fail to mention the foundation of the sf.com platform: multitenancy - a bit different than the "on-demand" solutions other vendors are hustling to put on the market. take oracle for example: the acquisition of technologies inorganic to oracle is what's fueling their on-demand delivery....like SOD's IBM platform that had to be ripped out and replaced with Oracle infrastructure.

    as for Benioff's supposed delusions of grandeur...who hasn't been a little nice to the hand that feeds them. i'm sure you've done the same for SAP, no?

    i'll end on this note: the great thing about sf.com is that it's currently only trying to be the best at what it does: CRM and other business productivity apps. it has yet to claim to be an end-all-be-all solution, much like SAP and Oracle. is that really blustering?
    dukeuniv2005
  • You're probably right

    While the SFDC hype machine continues, their relevance continues to decline. While SFDC advances their PR, SAP and Oracle are clearly advancing their products.While SFDC claims to be all things to all people, pure-plays like RightNow and Aplicor deliver products far superior to SFDC. I agree with your assessment that a SFDC decline is inevitable.
    michaelwilliams
  • You are dead right!

    1.Apexchange is too simplistic and who wants to learn another language.
    2. Business don't operate like CRM as a service alone without other apps. Why go to the trouble of outsourcing CRM and then have to try and get the data in and out of your financial system backend. A lot of people have rocks in their head!
    VEGuru
  • Nuts...

    ...is what I think Joshua Greenbaum is after reading this story. Salesforce can be integrated easily using .NET, Java, JavaScript/AJAX, and Flex. Its new Apex code allows for a fully-hosted programming platform (releasing this fall). And there are a host of partner integraters with deep expertise to integrate SF with any number of ERPs, HRMs, and other enterprise systems.

    Salesforce is still the easiest CRM to learn, use, and deploy and that gives it a huge edge with those who matter -- users in the field.
    jt@...
  • Lipstick on a pig...

    ...AppExchange aka "build anything you want as long as its CRM" As opposed to WebEx Connect or iGoogle is not going to be enough. DreamFactory is making some big waves and will be the tsunami that swamps the SF.com boat when anyone can build their own CRM system or customize from templates and run on the WebEx Connect workspace or within iGoogle or iMac or your own GoDaddy web site, XML storage, no database needed and store it anywhere, even on your own laptop.

    So I think your prediction is quite right, the end of software as you know it, even SF.com's
    moliver@...
    • Thanks for a great laugh

      "XML storage, no database needed and store it anywhere, even on your own laptop."

      XML - the COBOL file description of the 21st century - obsolete at birth and hyped to hell.

      Dream on DreamFactory.
      jorwell
    • WebEx Connect! iGoogle! iMac! hahaha

      love it. good stuff
      scred@...
  • Salesforce-as-platform

    I think the article overlooks what Salesforce.com has done with their "Apex" platform. The upcoming release of "Apex Code" (in beta now) is a pretty interesting platform play. They've made it *very* easy to build business applications of any variety on their infrastructure. Developers using the platform can focus on only the business logic and ignore a huge amount of the application stack. It's a very compelling proposition that goes well beyond their CRM offerings.

    It remains to be seen how the platform can be leveraged outside of the CRM space. How they price it for non-Salesforce customers (and thus how they allow developers to price apps on it) is an interesting question, but one that they are already addressing.
    jjhart
  • You're right about Google!

    re: "...And don?t think a consumer giant like Google (which has no innate understanding of the enterprise software market), and its poor excuse for an online Office suite, can rescue SF.com..."

    Google CEO Eric Schmidt was once on the Siebel board of directors and I'll bet he probably knows no more about CRM now than he did back then!
    DJJazzyJeff
  • Grow big or go home.

    That's about it.
    3dguru
  • More than just integration issues

    One of the biggest issues with Siebel and CRM 1.0 (1997-2003) was user adoption rather than just integration issues to ERP systems or the platform stacks (I have used Siebel myself and have 10 years implementation experience with CRM). Users were not adopting the software because it was too complex and a lot of the licenses sold to customers became shelfware thus reducing/eliminating the return on investment. Some of the shelfware problems arose due to the license model itself i.e. buy large number of seats upfront and get deep discounts which does not occur as much as SaaS.

    From all accounts, Salesforce.com has relatively good user adoption and I have heard good reports from salesperson themselves around ease of use. Too me, CRM is all about empowering users with there interactions with customers and prospects. As long as a CRM does that, it will be very successful.
    robert.rudd@...
  • Salesforce is for amateurs

    We are a sales representative that has used Salesforce.com product. The product is always used, in our experience, with companies that have little or no sales executive that ever sold. It is the classic ratio sale of bring as much activity and win a percent at the end. Quality does not matter. Most sales reps are under 30 day contracts and will not give genuine names of contacts and projects, if they are smart, because the wins are months away and the contacts are the reps value.

    Curt
    Curtrh
  • salesforce.com design for sales asassins

    The first problem with salesforce.com is that it is merely a sales contact automation app. It is not a customer relationship manager because it is very difficult to integrate with a business financial/accounting and/or ERP. There are many third party applications listed in appexchange that attempt to integrate salesforce.com with financial and other reporting systems but they are very complex and require too many steps. An account manager needs a 360 view of their customer in one place for true CRM (even a 180 would be good), including the details of what was ordered and shipped (if biz has sells products). Recently Marc Benioff said his sales force were "asassins", that is make the kill (sale) and move on. And the product is fairly simple - did we sell 10 subcriptions or 100? Professional or Enterprise? So for Benioffs asassins, I'm sure salesforce.com is just fine. So while I agree that salesforce.com brought the idea of SaaS to the "masses", the time is now for defection to an Saas that has been properly architected from the onset and not retrofitted using 3rd party vendors as band aids.
    Eric987
  • Fantastic article

    5 years later, $3B run rate, no end in sight, the poster child for cloud platforms and cloud services. Siebel 2.0 indeed. hahaha
    scred@...
  • Bueller...Bueller....Bueller....anyone there...

    Care to comment Joshua Greenbaum? 5 years later? I too do not see an end to SFDC... Where's your crystal ball now, collecting dust no doubt...
    uniquevisage@...