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CRM Realities Force Siebel To Shift Leadership, Direction

With Tom Siebel stepping down as the CEO of the company that he founded, opportunities open up for fresh thinking and insight into Siebel’s future. The Bottom Line: Companies typically do not change leadership positions if they expect to follow the same path.
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Written by Laura Preslan on

With Tom Siebel stepping down as the CEO of the company that he founded, opportunities open up for fresh thinking and insight into Siebel’s future.

The Bottom Line: Companies typically do not change leadership positions if they expect to follow the same path. Siebel must change course to remain competitive.

What It Means: The Customer Relationship Management (CRM) market has changed significantly. Siebel was at risk due to a number of factors including the following:

  • Competition from Enterprise Resource Planning (ERP) vendors is fierce. Vendor rationalization is the trend as companies replace best-of-breed tools with ones that are less functional but more easily integrated with back-office processes.
  • CRM growth has stalled, with Siebel losing 17% of revenue in 2003.
  • Most CRM growth will come from hosted systems and analytics rather than the large, complex applications like Siebel’s flagship product.
  • With choices like salesforce.com, customers are choosing ease of use over functional complexity.
The Takeaway: Competitive pressures and a lackluster financial performance in 2003 show that Siebel cannot survive as a stand-alone CRM tool provider.

Conclusion: As the group executive for sales and distribution worldwide at IBM, Mike Lawrie has the experience to turn Siebel around. OnDemand and Analytics must lead the business and new markets must be added as the traditional CRM pipeline continues to shrink. We expect that Siebel will milk the existing CRM customer base as it regroups and switches focus to Siebel CRM OnDemand and Analytics.

What about being acquired? Lawrie, a seasoned leader, wouldn’t assume this position and then sell the company right away. A more likely scenario is that Siebel will do the acquiring to round out the product portfolio (Yantra, i2, or Pegasystems).

Recommendations

  • Hold course with existing implementations unless projects are already in progress to rationalize across an ERP backbone.
  • Those with upgrades and implementations in progress should continue with them.
  • A change in executives does not change market realities. Prospects need to look at the bigger picture issue of integration with any CRM selection.
AMR Research originally published this article on 3 May 2004.

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