TCO reduction is Siebel's top priority, CEO says

Siebel Systems Inc.'s announcement last week that it will reenter the hosted CRM (customer relationship management) market it abandoned two years ago is a sign of the company's commitment to meeting its customers' ever-changing needs, Chairman and Chief Executive Officer Tom Siebel said Wednesday during a keynote speech opening Siebel's annual customer conference, in San Diego.

"Enterprise software must embrace the speed of change in business into its DNA," he said. "In this new era of CRM, we see hybrid solutions, to meet the requirements of distributed business models."

Siebel's top focus remains reducing ownership costs and increasing ROI (return on investment) for its customers, according to Siebel, who said he told his engineers to spend this year setting aside work on functionality expansions in favor of an intensive focus on lowering costs. Last year, he pledged to customers that Siebel would cut its TCO (total cost of ownership) by 50 percent; in Siebel's tests, it hasn't quite hit that target, "but we did come really close," Siebel said.

Siebel's next major upgrade, version 7.7, is now functionally complete and on track for release in the first half of 2004, he said. A complete overhaul of Siebel's CRM system remains many years away, however. Siebel predicted that his company could stick with its version 7 system through the end of the decade.

"This is not something that's going to be replaced next year with a version 8," he said. "We see this as a product architecture with legs."

Siebel touted during his keynote the company's new mantra: "CRM for Everyone." Through offerings such as its new on-demand service, Siebel wants to ensure that it has CRM products for companies of any size, in any industry, he said.

Siebel's competitors have questioned the company's commitment to the hosted CRM market, which Tom Siebel dismissed as unimportant two years ago when his company shut down its initiative. In his speech in San Diego, Siebel avoided any direct comment on his former assessment of the CRM ASP (application service provider) market, emphasizing instead his company's desire to adapt its product offerings to meet its customers' demands.

Siebel also spoke about the company's Universal Application Network (UAN) initiative, a portfolio of packaged integration applications intended to help customers implement business processes across heterogeneous software applications. The integration market is "like gold," Siebel said. His company announced Wednesday the release of more than a dozen new UAN integration processes, and highlighted its continuing work with partners including Microsoft Corp. and IBM Corp. to keep UAN integrated with the latest technologies.

One customer attending Siebel's keynote said he appreciated hearing about the company's plans to stick with its version 7 architecture for the foreseeable future.

"It's comforting to know that they're starting to stabilize," said Charles Pierce, director of IT for GMAC Insurance, a Winston-Salem, North Carolina-based General Motors Corp. subsidiary.

GMAC Insurance has been a Siebel customer for two years. It's currently using version 6 and plans to upgrade sometime next year. Siebel's software has been working out fine for the company, Pierce said, though he questioned the rosy tone of Tom Siebel's pitch about the value of Siebel's technology.

"It's not quite as much fun as what he described," Pierce said.

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