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Monday, May 16, 2005

Siebel – Headed Which Direction?

Inside Siebel's office, the mood isn't looking good,writes Businessweek quoting conversations with departed employees. Workers and execs are said to be struggling with a myriad of issues. Last month,Mike Lawrie,CEO for less than a year, was fired, and Siebel missed first-quarter earnings expectations by 12%. Now a shareholder revolt is brewing, employees are defecting by the dozen to German rival SAP and rumors are rampant of takeover bids by ever-acquisitive database giant Oracle or even financier Carl Icahn.

There is also a question of what new CEO George Shaheen, a longtime Siebel board member, is being compensated to do. If 35% of the Siebel is sold, Shaheen will receive two years' salary - about $2 million, plus a target bonus of 125%. While this is a common deal for a CEO, Lawrie had a similar deal if 50% of the company changed hands. Layofffs and talent hunt by SAP seems to be hurting Siebel a lot more. It is a study in contrast when SAP sued Siebel in 1999 for engaging in "predatory hiring practices" when it lured 27 of its key employees. It’s a real pity – Siebel used to be really a strong entity – super strong and elite – certainly has a lot going in its favour – but alas how will this overcome this negative sentiments?

My Take: Siebel has sold maximum number of seats last year. Siebel Systems' overall ability to deliver mature & comprehensive set of CRM applications will remain unmatched. Siebel has unique opportunities to capture the desktop users in service industries retail centers. The eDocs and Eontec purchases leverage would be the key. Siebel's sales engine must fire well. Siebel should demonstrate superior capabilities in SOA, composite applications & integration capabilities and should score above SAP & Oracle. Needs to go all out with Siebel CRM OnDemand product in the market. One of Siebel's biggest opportunities lies in capturing the desktop users in branches, dealerships, brokers and even consumers. How it executes on the eDocs and Eontec purchases will give an early indication of future success in this strategy. Clearly execution is the key to success – this would be the single most important determinant of Siebel’s future and to an extent shall shape the developments in the enterprise software market.

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