Siebel’s row to hoe

Siebel has arrived at the crossroads. It can embrace and innovate on technologies that deliver software as a service, or it can simply pick up the hosted CRM barrow as a method of reinvigorating its traditional business.

Judging by this morning’s keynotes here at Siebel User Week in San Diego, I get the impression company is doing little to project a new, dynamic image to drive home the opportunity afforded by its IBM deal.

Firstly, I entered the keynote hall to hear Huey Lewis and the News’ 1980’s hit “Hip to be Square.” Yeesh, I thought we’d all forgotten that song. Secondly, the message delivered by the opening keynotes was the same big-business theme we’ve heard for years.

The keynotes delivered by Merrill Lynch Global Private Client Group’s CTO Byron Vielehr, and BT Retail’s CIO Catherine Doran both served to underscore that Siebel is a vendor they turn to for high-end, scalable CRM. Indeed, Vielehr heads up Merrill’s $1 billion outsourcing program, a massive project by any standard. He chose Siebel because: “We didn’t actually think anyone else could get it done.” And I think that’s a fair comment. But the reality today is that there are not too many $1 billion Merrill Lynch-type projects out there.

I struck up a conversation with Raghuram Putcha, Project Manager, at Siebel integration partner Infosys before the show kicked off. He offered a pretty good summary of Siebel’s state of affairs: “They have run out of opportunities for big business.” Putcha believed Siebel’s On Demand hosted initiative is all about targeting the real opportunities in the mid-market. Microsoft’s forth-coming CRM product and Salesforce.com were the two dots on Siebel’s radar, he speculated.

So naturally I was very interested to hear Jeff Pulver, Siebel’s VP of worldwide marketing kick off the show by including comments about Microsoft, a long time partner and co-sponsor of the show. After affirming that Siebel “works very closely” with Microsoft, he transitioned to talking about Windows 2003: “Microsoft continues to show this is a very powerful platform to run your Siebel CRM deployments.” Maybe that comment was targeted at the big business audience?

It will be interesting to see how Siebel positions IBM and Microsoft as the show unfolds. Of par-ticular interest to me is how Siebel and IBM’s integration story will unfold. Siebel announced to-day the launch of “Siebel Business Integration Applications for the IBM WebSphere Business Integration platform.” [As a side note, it appears that site has broken an embargo or something because Siebel PR people in the press room here flipped out when I asked them about the news. The official announcement will be issued at 2pm today, they said.]

Regardless, there’s no prizes for guessing what IBM is hoping to get out of its Siebel relationship – WebSphere customers. But that raises questions about Siebel’s own integration platform, Universal Application Network. Does anybody actually use Siebel’s UAN technology? Not according to Infosys’ Putcha. Seventy percent of his CRM business revolves around integrating Siebel and no-one is asking for UAN. “Why would you need it? There are plenty of established tools already out there.”

Chairman and CEO Tom Siebel will speak at 1:30pm today, so stay tuned for further coverage. But before I go, I was amused to see that Salesforce.com had paid a couple of people to hold up a Salesforce company banner on the pedestrian approach to the convention center. It was simple guerilla-marketing at its best, and a sign that Siebel will need to do more than just show up with a hosted offering and declare victory.

UPDATE: I just had lunch with Bharath Kadaba, VP and GM of UAN, who said Siebel has only been selling UAN since last November. Siebel as a whole has 3500 customers, and of those 34 customers are in the process of implementing UAN. But of that 34, just 6 are currently “live.” Kadaba cited the product’s short time in the market and the complicated nature of its integration as the reasons. Also, he does not believe there is any direct competition between IBM’s WebSphere and UAN, rather they are complimentary integration technologies. “The integration server market is fragmented, and that’s why they need our (UAN) product,” he said.