Interview: Siebel exec backs Web services model

Siebel Systems believes enterprises want the choice of on premise or hosted customer relationship managment (CRM) -- or both. And the glue in the middle is Siebel's Web services-based Universal Application Network (UAN). In an interview with Mark Jones and Ephraim Schwartz, Siebel Executive Vice President David Schmaier argued the company hasn't forgotten its object-oriented roots.

InfoWorld: What's behind Siebel's "CRM for everyone" strategy?

Schmaier: We have known for 10 years that CRM is the largest segment of application software. We knew if someone could build the state-of-the-art (CRM) software that this would be big. It is very clear today that CRM is not only bigger than ERP it's probably one to two orders of magnitude bigger.

InfoWorld: In your Siebel User Week keynote you spoke about Siebel's metadata architecture. What's your vision for that?

Schmaier: (Back in) 1983 we started building an objected-oriented piece of application software. We (built what we) call configurable business objects. At run time, these objects respond based on property and attribute pairs in our metadata repository. And because it's metadata-driven and declarative by nature, we also have a patented three-way application upgrader. So basically what we have is one metadata repository and we happen to store our metadata in a database. We have what we call Siebel Tools with this new customization environment, (and) when you hit (the upgrade button) it'll crunch through all these customizations (that a customer built); it takes anywhere from four to 12 hours. We also give you an online merge-history of what we did, and you can literally take each change and incrementally roll it back, capability by capability (if needed). We actually have a U.S. patent on this technology.

InfoWorld: How long have you had these capabilities?

Schmaier: We built the metadata repository in Version 1.0 and we built the application upgrader in Version 3.0 which shipped in 1996 or 1997.

InfoWorld: How do Web services and the UANfit into this technology?

Schmaier: What we've done is expose all of these (application components) as Web services. It supports all the common XML (Extensible Markup Language) and Web services capabilities. These things are spawned from this metadata repository (and) our Siebel Tools designer allows you to drag and drop and change the metadata and then it automatically reconfigures the system to work.

InfoWorld: What's the benefit of Web services-enabling objects in this fashion?

Schmaier: There are huge benefits. UAN has something in the middle called the common object model. It uses a publish-and-subscribe metaphor that allows you to make calls to UAN, which basically then coordinates all the transactions across all (of an enterprise's) different systems. What's interesting about UAN is it not only works from Siebel to Oracle, (for example), but it works from Oracle to Oracle.

The other reason Web services are important here is I might use a bunch of Siebel components or I might have my own custom-developed pricing engine, and I want to be able to just plug those things in and use them. We can actually support plugging in these other components because we have a component-based architecture. Compared to SAP, which is all built in ABAP, and compared to Oracle, which is all built in PL/SQL, and compared to PeopleSoft, which is all built in People Tools, they do not have component-based architecture. We actually do have true objects that support polymorphism and do meet all the classic definitions of object-oriented, inheritance and other classic tenants of object-orientation.

InfoWorld: How long has Siebel had this component-based mindset?

Schmaier: Since Version 1.0, since times began. Except I would say that during the first three to five years of the company, we would win based on technology and lose based on functionality. What happened is through the years our products became so much more functional than every other thing out there that we talk about this (technology advantage) last.

InfoWorld: How does that translate to today's hosted CRM discussion?

Schmaier: UAN is a modern architecture that assumes that most of the data is not within our system but within other systems. With UAN you have not just connectivity but pre-built integration to SAP, PeopleSoft, Oracle, billing systems, (point of purchase) systems. I think a lot of people have been slamming the hosted model because it's hard to integrate. We don't even ask you, we think it's actually going to be easy to integrate. We think we can out-integrate anyone else on the hosted side. That's going to be a major part of the differentiation.

InfoWorld: How do Siebel's pre-built integration components work when it comes to building vertical, industry-specific solutions?

Schmaier: Today we have 140 integration applications. These are our UAN integration applications. About 70 of them are industry-specific right now and we're building about another 100. (For example), we’re building up UAN to link to all the (business processes) that AT&T and SBC (Communications) and British Telecom need. I would say that 70 or so of these are core, and then we're expanding vertical by vertical.

Big picture, one change is people are rolling out CRM across the company. The second change is integrated hosted and on-premise CRM. The third change going on is this move toward business processes. What we've done is figure out what people are really trying to do with these systems and we've cataloged all this. (We know) what are all the business processes in marketing, what are all the business processes in sales, what are all the business processes in customer service, how do you do this with partner management, and how do you do this with employee management? We found out that these business processes were not only not understood, but nobody wrote them down anywhere. So we decided to write them down. It's free with the software.

So basically these 140 (integration) apps are running in what used to be called WSFL (Web services Flow Language) and now this is called BPEL (Business Process Execution Language).

InfoWorld: Siebel announced at its User Week that its CRM and analytics capabilities are blended together in OnDemand. When is it practical to have a separate analytics offering for on-premise CRM?

Schmaier: Technically, the way that these overall CRM systems work and these analytic systems work is different. Behind the scenes at Siebel analytics we have Star Schema and a bunch of other stuff that move in parts that you don’t have on, what I call the OLTP (On-Line Transaction Processing) side. You need people in sales and support that are skilled experts and what really helped us become No. 1 in CRM analytics was we have a whole team that I think is as good of an analytics team as exists out there. Well, that’s one reason. The other reason is we see a big opportunity to go after analytics beyond CRM. With our (Version) 7.7 product that we announced, we plan to go after that.

InfoWorld: Do you think hosted CRM will mature to the point where on premise-style software is no longer required by large companies?

Schmaier: You can argue about this when it comes to buying a car vs. leasing a car. When leasing came out, they said, "Well, everybody in the world's going to lease a car, why would you buy one if you could lease one?" It's not true. I buy cars, I might lease one too, I might do both. The probability that General Motors or Marriott will host everything is approaching zero. All we're going to do is build the world's best functionality in this area and deliver it to you however you want.

InfoWorld: How closely is Siebel working with Microsoft?

Schmaier: We have a US$200-plus million development deal with Microsoft. I think (we) are the first major package to integrate with Office 11. We helped work with Microsoft on the Web services standards for Office. We are working with them on SharePoint. We worked very actively with them on Outlook integration so that in our Siebel 7.7 product you can embed Outlook within our CRM system. That's a tribute to Web services where you can mix-and-match components as you need be.

InfoWorld: How worried are you about Microsoft CRM?

Schmaier: We don't really see it (as a threat) today. Some people think that CRM is contact management, (like Microsoft Outlook). But then when you really look at what sales, marketing, and service people do, contact management solves one three-hundredths of the problem. We're not naïve about Microsoft as a potential competitor, but they look a lot more to us like a partner than a competitor, quite frankly.

InfoWorld: Will there be tight integration between MS CRM and Siebel?

Schmaier: You'll have to ask Microsoft's CRM team. That's not our focus. Our focus is integrating our CRM products to Outlook and Office.

InfoWorld: Exactly how will Siebel's OnDemand partnership with IBM Corp. work, and do you plan to forge partnerships with other vendors?

Schmaier: We built the software for Siebel CRM OnDemand with IBM -- IBM provided us with technical assistance from their J2EE group as we built it on WebSphere and DB2 -- and we will sell it and IBM will sell it. We will do customer support and billing regardless of who sells it. We have a profit-sharing model, but it's not exclusive either way so we're free to go off and have other partnerships and IBM's free to go off and have other partners. "Exclusive" doesn’t really make sense in the year 2003. Exclusive just precludes you from doing things, and I think the world's more complicated than that.

InfoWorld: Does that mean you are looking at companies like Sun Microsystems or others?

Schmaier: I would imagine that there will be other partnerships in this space.

InfoWorld: Do you want to work with regional hosting companies, for example?

Schmaier: Yes, I'd think of them as a reseller of our Siebel CRM OnDemand, and if they host it in a market where it made sense to use their datacenter, we could definitely do that. What we really want is to get to each market. One thing IBM will do is sell it to the business partner network, which is 90,000 companies and 300,000 individuals. So that's a pretty big channel.

InfoWorld: Given your Web services focus, why is there still a perception that Siebel has a monolithic feel?

Schmaier: I think that objection is largely raised by our competitors, quite frankly. And I think it involves a couple of facts. One is because this architecture is very flexible, the good news is you can change every screen, you can change every business rule, you can change every database table, and the answer is generally -- yes, you can do whatever you want. The bad news is, you can do whatever you want. You can change every screen, you can change every business rule, you can change every database table. It's become clearer and clearer to us that if time and money were no constraint, people might just fill a white board up with all these ideas, and because our system's incredibly flexible, you could basically do everything. But at the end of day, time and money usually are a constraint. All we're saying is, there are 31 flavors at Baskin Robbins and vanilla's the flavor of the month because it's less expensive and we can get it to you in mass, it's faster to get.

InfoWorld: Hosted CRM companies have built their businesses around arguing that Siebel is broken. Is it?

Schmaier: No, I don't think so. I think one company will have 50 percent share of hosted CRM and my bet is it's going to be us. If this turns into a feature war in hosted CRM that would be the best possible outcome because we can turn features on faster than other people can build them. We built the superset.

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