Siebel - getting to know the gorilla

There's something rather disconcerting about Tom Siebel. He's surprisingly spry and energetic, though he looks every one of his 48 years. The haircut has a donnish untidiness about it, and the way he toys with his glasses - slowly and deliberately, as if waiting for a slow student to deliver a feeble excuse for a late essay - adds to the professorial air.

He has just launched the Siebel University, too. But it's not the kind of university where people sit around and discuss philosophy - think of it more as a glorified training centre. Academic mannerisms sit uneasily on Siebel's shoulders, as if a presentation coach has taught them. And let's face it, he's not a professor at all, but a salesman through and through.

His first job in computing after leaving business school in Chicago was at Oracle, where he worked as an assistant salesman, effectively setting up demos for a senior rep. In two short years, by 1985, he became the top salesman at the company.

While at Oracle, he designed a software tool to help reps share information and work with each other. Siebel wanted to commercialise it, but CEO Larry Ellison and the other Oracle top brass wouldn't support him. So he struck out on his own, establishing Siebel Systems in 1993.

The next eight years were exceptionally kind to Siebel and his company, which blossomed from a start-up to a major player with a market capitalisation of over $50bn. (A sum that has more than halved since its stock peaked last year.)

Not only did he identify a promising market opportunity, he instilled a company culture with some unique and interesting features, all aimed at generating a customer service culture of frightening intensity.

One of Tom Siebel's stock phrases is: "We're a customer service company, not a software company."

That message is well ingrained. All Siebel staff are courteous and helpful to the extreme, and rarely seem to stray from the corporate way of doing things.

It's not surprising. Half of annual bonuses are based directly on measured customer satisfaction. A Siebel VP, for example, might get half his annual salary as a bonus, so 25 per cent of his pay is directly linked to surveys of customer satisfaction.

Siebel sales reps are also paid according to satisfaction - six quarters late. This is designed to cut out a lot of the hit-and-run sales tactics that dog the software industry, and CRM in particular.

CEO Siebel has been accused of running a 'marketing-led' company. It is a charge to which he replies "guilty as charged", but he wouldn't accept the obvious subtext to that question: that the underlying product is basically not very good.

The company's success has been built on aggression. More than one analyst has described it as a "gorilla". Its strategy is to control 50 per cent or more of any market it enters, squeezing out the competition in any way it can.

This market share approach has worked extremely well. However, there are plenty in the industry who don't believe in Siebel's vision. Yes, it's a customer service company. That's a good thing, they argue, because the software itself is lousy.

Like the man and the company, Siebel's solutions tend to take centre stage. All underlying data has to be stored in Siebel's own format, which means it isn't easy to integrate with other systems. The company has recognised this state of affairs has to change.

Many larger customer organisations, such as banks, already have a significant investment in different customer service systems and aren't too keen to rip them out and install wall-to-wall Siebel.

Siebel's relationships with their integration partners have also been criticised. The company demands substantial payments into a 'joint marketing fund' before access to lucrative Siebel business is granted. Once partnered, companies understandably want to recoup their 'contributions'.

"Because of the financial commitments systems integrators need to make to become a Siebel partner, there is concern that Siebel solutions are being recommended even when their suitability is questionable," said one source, who asked not to be named.

Siebel products have also had to be customised extensively, something the company is trying to address, given some high-profile implementation horror stories. The idea is to make installation times shorter and reliability higher.

However, Duncan Chapple, a CRM expert who has followed Siebel over the years, asks: "If you're looking for a competitive advantage in customer service, how are you going to get that if you are running the same software as everyone else? If everyone runs standard Siebel CRM products, the only difference between them will be the colour of their logos."

Siebel, he says, is an excellent product for the middle market - companies with less than 100,000 employees. But this market is close to saturation, and Siebel may be hard pressed to maintain current levels of growth.

Hence the new plans - moving into e-government, 'employee relationship management' (a front-end for human resources, payroll and so on) and strengthening a range of customised vertical market products.

Chris Fletcher, CRM analyst at the Aberdeen Group, agrees. "For sales force automation, they're among the best," he said. "But it's not a true ebusiness suite. Ebusiness - i.e. customer interactions over the web - is actually the area where they are weakest. They can scale to 10,000 units alright, but when it comes to transaction capacity and data throughput, they tend to fall down."

None of which discourages Tom Siebel. "We are currently the second largest ebusiness software company in the world, and in five quarters time we will be the largest," he growls at anyone who comes near him holding a notepad.

Of course it all depends on what you call an ebusiness software company. But it's a bold claim, and if anyone can do it, it will probably be Siebel. Time will tell if his own software is what holds him back.

Tom Siebel features in silicon.com's Agenda Setters 2001. To find out more, visit http://www.silicon.com/as2001