During his short presentation, freshly appointed CEO George Shaheen made no reference to predecessor Michael Lawrie, the poor first-quarter results, or the implications these events might have on Siebel’s ongoing strategy. Rather, maintaining the line he presented when his appointment was announced, Mr Shaheen stressed that he is happy with Siebel’s strategy and has no intention of changing it.
He reiterated the view that by focusing on customers and working with them to ensure their implementations deliver value, the company will improve shareholder value. We have a new way of looking at ourselves. We are an evolving company and have a new view of ourselves and are presenting it to you, he said.
The relationship with the customer is critical to business success we intend it to be the essence of what we are all about, he said. The question is why dedicated CRM vendor Siebel is only adopting this stance now when CRM is supposed to be built around the customer.
A major concern is not what Mr Shaheen said, but what he did not say. By failing to acknowledge some of the very real issues facing Siebel, he did little to build confidence in the company and its future prospects.
When stressing the strengths of the company, he said: We have a large customer base, continued investment in products to keep them market-leading, and broad, wide, and deep front-office products, adding that the company has the talent, the products, and the financial strength to enable it to maintain its independence.
While the claim to financial strength is debatable, given its financial history over the past few years and particularly the recent prelims that were the catalyst for Mr Lawrie’s removal, he maintained that its financial strength is demonstrated through its $2.2 billion cash pile, its free cash flow, and its ability to invest $3 million per year in research and development.
However, he admitted that the company needs to do more. We are not standing on our past success or on our customer base, he said. What the market is telling us is that we can do better and to be frank I agree. He was adamant the company would be around in a year’s time and that it is not heading for an exit.
Mr Shaheen stressed the role of the company as a solution provider rather than a software provider. Although this approach certainly fits with his consultancy background, it is not one of his initiatives but a direction Siebel had already started to take. We could make a stronger commitment to our customers and partners, he said, Too often we have not been close enough. We want to do more, we have to.
The company was founded on the vision of a technology platform built to serve customers and the company’s relationship with the customer. It was very product-focused as a result, he said. As we grow, we will be looked at more as a solutions provider than a product companyall enterprise companies are in that position. The challenge is to build the skill sets and build them while maintaining existing solution partnerships.
In short, it does not want to sell licenses and run. The CRM vendor wants to build a relationship with its customers, and a large part of this involves ramping up its services business on the grounds that if it is involved, it can help its customers achieve success. Its objective is to have Siebel people involved in every stage of customers’ planning and implementation cycles, enabled via the Customer Experience Blueprint.
Although the blueprint is new, the concepts behind it are not. It is Siebel’s attempt to institutionalize its best-practice by addressing the technology, process, and people aspects of CRM strategy, with the objective of enabling customers to get value from their solutions.
In essence, Siebel hopes the blueprint will provide it with the means to offer services to its customers, either directly or via the customer’s existing partner, that will ensure the CRM solution delivers the ROI and business benefits that were originally intended. It is a direct license driver because Siebel believes that by working to ensure that the customer benefits from Siebel technology, it will drive customer interest and lead to further investment in Siebel solutions. The market will define us as solution not product company, Mr Shaheen said.
Although the concept of the Blueprint is valid, it can hardly be considered new and ought to have been core to Siebel’s business before this. Indeed, the company has been a proponent of CRM as a combination of people, process, and technology for several years. The primary difference is that Siebel has now created a standardized approach to implementation, covering everything from process and people to technology and business objectives.
Much of its future success appears to be resting on the success of the blueprint and the services operation. The question is whether this will be sufficient to enable the company to achieve a turnaround and get prospects buying software licenses at the rate Siebel requires and within the timeframe required to satisfy disgruntled shareholders.
Although the blueprint and services approach will bring revenue opportunities, it will also bring risk because it could result in Siebel treading on the toes of its systems integration partners, which is why Mr Shaheen was careful to stress that Siebel would never rival IBM in the services stakes.
Siebel has a difficult balancing act ahead of it. It has to gain customer trust and instill confidence in the market by getting its hands dirty in the services arena as it proves CRM can provide the ROI and business benefits ascribed to it. It also has to use services to drive license revenue while at the same time keeping its solutions partners happy.
