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Until recently, Siebel was absent in the small and medium enterprise (SME) market segment. However, during the past six months, Siebel has launched two new product initiatives -- Siebel OnDemand and Siebel CRM Professional Edition -- designed with a more holistic view of what constitutes an SME.
Although there is significantly more appeal in its new approach, Siebel is still bedeviled by challenges that have kept its previous attempts from being successful.
Meta trend: During 2004/05, external pressures to leverage new technologies (e.g., RFID, UCCnet), provide customised services, and improved visibility will drive companies to upgrade supply chain execution applications (e.g., warehousing, transportation, manufacturing). Concurrently, international trade, security, and compliance pressures will motivate companies to upgrade global trade, health/safety, and contingency planning solutions. Through 2008, companies will merge information processes among CRM, SCM, and PLM applications to holistically scrutinise demand/revenue flows across customer and product life cycles.
Siebel has been challenged to find its footing in the mid-market, and despite some false-starts (e.g., hosting via US Internetworking) and outright failures (e.g., private-label version for Great Plains), the company is finally starting to -get it." During the past six months, Siebel has made significant strides with its SME strategy by launching new products and packaged-delivery approaches that will appeal to a much broader range of SMEs than it has been able to do in the past. But the company continues to face challenges in how to scale the Siebel platform to those outside its traditional base of enterprise customers.
To Siebel's credit, it has embraced a more inclusive definition of the SME market that recognises the business units and subsidiaries of Global 2000 (G2000) organisations are as much SMEs as they are distinct firms of a particular revenue or staff size. This was particularly important for Siebel, because it was losing opportunities with these organisations to an array of mid-market vendors, despite the fact that the associated central IT organisation had -standardised" on Siebel Enterprise.
Simply put, these mid-market customer relationship management (CRM) vendors (e.g., FrontRange, Onyx, Pivotal, SalesLogix) were offering faster-to-deploy and less expensive solutions than what the G2000 division could get through a departmental deployment of Siebel or via a chargeback mechanism if using the corporate version of Siebel. Siebel has sought to solve both these problems as well as the competitive shortcomings of its existing Midmarket Edition by leveraging its existing Enterprise platform. The result are two new products -- Siebel OnDemand and Siebel CRM Professional Edition -- hosted and on-premises solutions, respectively.
On the positive side, this approach builds in co-existence between these two deployment models and, particularly in the case of Siebel OnDemand, provides a clear reason for the interdependent organisations of the G2000 to stay with Siebel. In fact, we expect that during 2005 leading organisations will begin embracing hybrid delivery models for CRM deployments (i.e., deploy with options from along a continuum including hosting, outsourcing, and licensing). Siebel CRM Professional Edition, on the other hand, is best considered a stopgap measure. Although it is a distinct engineering effort designed to simplify an intricate CRM environment, Siebel's long-term success with on-premises SME solutions is tied not to new product definitions, but to the simplification of the Enterprise platform. As a result, by 2006, we expect Siebel to remove the distinctions between its Professional Edition and Enterprise products in favour of using the form er as a low-cost deployment model for all its on-premises customers.
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