Siebel upbeat in face of doubts

The CRM software specialist's chief executive has announced a new direction for the company but some analysts warn customers that Siebel could be an acquisition target
Written by Andrew Donoghue, Contributor

In the face of internal turbulence and scepticism about his company's future, Siebel's newly appointed chief executive has unveiled what he claims is a new strategy for the struggling enterprise software company.

Speaking at the company's fifth annual European user conference in Barcelona on Monday, Shaheen said the customer relationship management specialist was focusing even more tightly on the customer — highlighted by a new tag line "It's all about the customer".

"We have a new way to look at ourselves, we are evolving our company," said Shaheen." I think that our relationship with customers is critical to business success."

Shaheen replaced former boss Mike Lawrie last week. Lawrie had been with the company less than a year when, following a poor first quarter 2005, he was replaced last week by Shaheen — previously of Andersen Consulting and the former chief executive of defunct online grocer Webvan.

Shaheen said that building a customer-driven business is a challenge but something all companies should be aiming to do. "It's hard, but if it was easy then everyone would be doing it."

But Shaheen's talk of a new direction and increased focus for the company comes at a time when industry analysts are expressing concern both about the decision to remove Lawrie, and about Siebel's long term product strategy.

According to AMR Research analyst Laura Preslan, Lawrie was not given enough time for the changes he wanted to implement at the company to take hold.

"This is a setback for Siebel during a time of difficulty and uncertainty. Shaheen must make direct and decisive action in the short term to demonstrate his commitment to rebuilding the customer focus of the company. More importantly, Tom Siebel and the board must give his plan time to take effect," she said in a research note released last week.

In another research note released following the announcement of Lawrie's replacement by Shaheen, analyst group Gartner claimed that the management change and Siebel's lack of focus continues to make it a target for acquisition, a factor which existing and future customers need to consider.

"Continue with current plans, but recognize that Siebel will continue to be a potential target for acquisition by a larger rival. Siebel has a strong cash position, strong partners and good functionality. However, as Oracle's recent acquisition of PeopleSoft showed, few companies are immune to acquisition," the analyst group warned.

For the quarter ended March 31, 2005, Siebel announced that it expects to post a loss of $7m (£4m) to $9m on revenue of $297m to $300m. The company was aiming for first-quarter revenue of $325m to $345m. "This was a combination of poor execution on our part, exacerbated by a challenging economic and IT environment," said ex-chief Lawrie.

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