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Siebel's future: 'customer relationship equity'

Siebel has been focused on the customer relationship management market for the past five years. That is changing.

LONDON -- Imagine you're the runaway market leader in a previously fast-growing sector that is now becoming saturated...

and is suffering from a poor reputation. What do you do?

If you're Siebel, then it seems the best way forward is through quiet diversification into emerging new markets, claiming this was always part of the grand plan.

The majority of interest at Siebel's annual user shindig in Chicago pertained to the customer relationship management behemoth's eagerly anticipated announcement of its first 'truly' Web-enabled software suite -- Siebel 7. However, the strategic repositioning of Siebel in a cost-obsessed business climate, particularly at a time of heightened competition in its core market, is a more interesting indicator of where the company is heading.

Siebel has been more or less exclusively focused on the CRM market for the past five years or so, but that is slowly changing. That Siebel is about more than just CRM has been evident for the last year, with the release of modules for employee relationship management (ERM) and partner relationship management (PRM). But these developments have lacked clarity in terms of Siebel summing up exactly how they fit into its grand vision. Until now.

Siebel's new mantra is 'customer relationship equity,' a term that it says describes its unique position to help companies align their people, processes and strategies around their customers for long-term competitive advantage. Somewhat predictably, Siebel says that in challenging economic times and a contracting market, a business's relationship with its existing customers becomes even more critical.

Thus, Siebel now has a three-pronged attack into the market, focusing on channels, employees and partners. In accordance, Siebel 7 constitutes the closer integration of its existing CRM, PRM and ERM modules, all with brand-new features that, among other things, emphasize their suitability for specific vertical markets and, most importantly, lower total cost of ownership (TCO).

Making a debut in Siebel 7 is its much-vaunted 'zero-client' architecture. Siebel calls it a 'fourth-generation' client, delivering both the interactivity of the Java/ActiveX client with the low bandwidth and lightweight nature of the HTML client. This 'smart Web' architecture requires no client installation (unless users want to work in a disconnected mode) and is geared mainly to the 40% of CRM software users that are based in the sales field, and thus require mobile access. And no client installation means low deployment and maintenance costs, which mean lower TCO.

Though Siebel 7 contains many new bells and whistles for greater personalisation, analytic and marketing capability, interactive selling and mobile support (it has added support for Palm OS and RIM's Blackberry PDA), as well as seven new vertical modules (for wireless, media, oil and gas, medical products, chemicals, retail and travel and transportation), the new release is an overhaul of Siebel's user interface, rather than a complete reengineer. In fact, few changes have been made to the server-side software.

That is not to say the changes are trivial; but the question is whether they are sufficient to put more distance between itself and an increasingly confident chasing pack, which most notably include a rejuvenated SAP and PeopleSoft (the latter of which launched its own zero-footprint CRM suite earlier this summer).

This is where Siebel's strategic evolution is important. The company says the ERP vendors are attempting to increase their customer base by supplying all the applications that a customer might need. This is impossible, says Siebel, not only because large customers typically run hundreds of different applications, but also because customers simply don't buy in this way.

Instead, they make decisions based around a specific business process, and want to ensure that they can integrate their applications where necessary. That is why Siebel has put so much effort into developing modules for vertical industries. In the final analysis it may be this that keeps it ahead of vanilla offerings from its closest competitors.

Siebel 7 doesn't rewrite the CRM rulebook, but it demonstrates that Siebel may finally be feeling the pinch of greater competition -- something to which it is not at all accustomed.

Siebel 7 will be available sometime during the fourth quarter.

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