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Special Report: Siebel and the SMEs

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14th Dec 2004
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Siebel is mounting another bid to capture the small and medium enterprise (SME) market with a beefed up channel programme that the company promises will learn from the mistakes of the past.

The overhauled SME model integrates direct sales with local and regional channel partners and a new partner alliance program for application development that specifically targets the SME base. SME sales representatives, known as territory managers, will work closely with channel partners to develop joint business plans for reaching the market on a regional basis.

Leads will be shared with partners, and channel partners will get access to the same training and materials as Siebel's own sales teams with whom they will be expected to work closely.

It's the first sign of CEO Mike Lawrie's commitment to the SME market which he articulated upon his appointment as Tom Siebel’s successor earlier this year. "We think small to medium businesses offer substantial opportunity for Siebel to participate and help to reignite our growth engine as we go forward," said Lawrie. "Small to medium businesses are making as significant an investment in the front office as larger institutions.”

Lawrie described the SME market as about 50 per cent of the CRM opportunity in virtually any country in the world. "This is a big part of our approach for growth," he said. "We talked about participating in new markets. Small to medium business is an example of a market we need to participate in a more full way than we have to date.

"We, along with our partners, can deliver tangible business value," Lawrie said. "We're going after a different go-to-market strategy and distribution model, we're actively embracing a new ecosystem and partner community. We'll launch many new products and continue to advance our existing product offerings."

The global head of the new push will be Bruce Cleveland (pictured), who previously developed Siebel’s Alliance Programme seven years ago. He subsequently left the company, but returned following Lawrie’s accession to the CEO seat.

While this is a global push by Siebel, Cleveland said that the emphasis was very much on local partners for local customers. "Sixty percent of SMEs prefer to do business with somebody local in their region, who does the education, training and support," he said. "We've put together a program that embraces those partnerships."

Channel conflict, always the bug bear with such initiatives, has been also been built into the thinking. The emphasis is on quality over quantity with partners being selected for their particular abilities in a geographic region or in a vertical market sector.

There will be a specially created sales and support organisation which will sell to the SME market exclusively. But while this team will sell, fulfilment of orders will be carried out through partners. When the direct organisation sells, they have to identify which resller will be paid for the deal.

Resellers that qualify for Siebel's invitation-only program must train and certify a dedicated Siebel sales rep and technical expert. Those partners must also agree to promote Siebel's software on their websites, as well as jointly finance marketing events that Siebel will create and coordinate with them.

In addition, each reseller partner has an assigned channel manager, receives an eternal-use license and presales technical support and has access to a dedicated partner portal.

The global SME Alliance Program is made up of more than 250 member companies, who will have access to open APIs to speed development of integrated partner solutions, along with a tool kit and support. To date, around 30 have been recruited in Europe with plans for twice that number.

Cleveland admitted that the new channel programme borrowed from other companies in the SME space, notably Salesforce.com’s sharing of sales materials, Microsoft’s sell through strategy, SAP’s concept of partnership and Pivotal’s concept of joint selling.

But there's a lot at stake. The SME market represents a significant revenue lifeline for vendors even those such as Siebel which under its previous management regime was openly derisive about playing in that area of the market.

"A new CRM market is being created, one which encompasses those businesses which were not part of the initial CRM adoption phase; CRM is being pressed into the mass market," noted Tom Pringle, Technology Analyst at Datamonitor and author of a new study - CRM for small to medium businesses. "The SMB space should be at the forefront of vendors' minds and the different categories of CRM vendors must now work hard to raise market awareness in the SMB space to translate this huge potential into reality."

Inevitably other SME vendors are not impressed by Siebel’s claims. "Siebel’s channel strategy is and has always been a dog’s breakfast. The company doesn’t how to partner with other organisations," said Phill Robinson, VP marketing EMEA at Salesforce.com. "Siebel does not understand the SME market and doesn’t know how to sell to SMEs in the CRM market place.

"What SME’s are looking for from CRM is to reduce cost, risk and complexity. Siebel is expensive, difficult to use, over-engineered and fraught with danger. The major vendors are all starting to exploit the SME opportunity despite having engineered software architectures built for the larger enterprise. Siebel has failed three times over the past five years. What says they’ll make it this time?"

Dean Mansfield, VP EMEA, NetSuite, commented: "Siebel's decision to re-enter the SME market raises some interesting questions. Exactly what is its definition of the small to medium sized enterprise? 1,000 employees? 50 - 250? Siebel's strength has always been in the large enterprise CRM space. If you mention Siebel to a sub-250 employee organisation, they run and hide.

"The SME market is not its core competency and as a result of this it will inevitably encounter some major cultural and business issues. Couple this, with its ongoing vocal support of the Siebel channel strategy and what will its partners think now? More to the question, which of Siebel's partners are equipped to sell to the SME space?"

There was also stark criticism from analyst firm AMR Research, which warned clients: “Siebel’s approach will not appeal to most SMB companies. Siebel must rethink its product, price, and partner strategy if it is to be successful in the SMB market in the long run."

Laura Preslan, AMR research director,argued: “Traditional CRM will not work for the SMB space. The success of salesforce.com and Microsoft CRM illustrates this point. Siebel Professional Edition has not been rearchitected to meet SMB needs. It suffers from its traditional product pedigree, like difficult and expensive customisation, “power user” user interface, and high cost of ownership. Its high degree of functionality is actually a detriment for this market, as it acts to confuse and complicate rather than clarify and help users and IT groups.

“Siebel CRM OnDemand is better suited for SMB companies and is gaining traction. For SMBs, however, Siebel continues to compare poorly with salesforce.com (and to an extent Microsoft CRM) because of Siebel’s lack of hosted application experience (only one year) and salesforce.com’s functionality and flexibility advantage. “

She concluded: “Only those SMBs that are attracted to Siebel’s brand and have past experience with Siebel should consider Siebel Professional Edition. SMBs that have a parent company that use Siebel’s flagship product should consider Siebel CRM OnDemand.

“SMBs that require the traditional licensed applications should look first to Microsoft, Sage, and FrontRange based on their extensive partner channels and understanding of the SMB market. SMBs that desire a hosted model will be better served by salesforce.com than Siebel CRM OnDemand, based on salesforce.com’s head start in the marketplace with 12,500 customers and counting.”

To date, Siebel reckons to have found enormous interest from the reseller community in the new initiative, despite the previous foray into the channel having enjoyed at best mixed success. But Siebel thinks it has learned its lesson and that this assault on the sector is better focused and comes complete with more SME specific technology.

"You can't just take enterprise products and water them down for this market," admitted Cleveland. "Small- and medium-sized organisations have an unmet need for proven, complete CRM solutions that enable them to upgrade from spreadsheets, home-grown contact management tools or legacy software systems they are currently using."

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