Siebel eyes bespoke developments

Customer relationship management (CRM) heavyweight Siebel will concentrate on replacing in-house developments in 2003, as it looks to restore its flagging fortunes.

The company is eyeing up this potentially lucrative market as it moves swiftly to quash speculation over its future.

"Talk of who has what market share misses the point," said Neil Morgan, marketing vice president for Siebel, Europe, Middle East and Africa.

"There are still many businesses using systems they have built themselves. There is a huge opportunity to grow into this area."

The recently signed partnership agreement with IBM will strengthen Siebel's chances to attract those with bespoke systems, according to Morgan.

Under the agreement, Siebel will be optimised for IBM's WebSphere application server. Morgan believes this will give Siebel better chances to sell to sectors such as retail banking, which typically use a Java-based infrastructure.

"We're developing a product specifically aimed at bank branch offices. It should be available before the end of the year," said Morgan.

But analysts do not share Siebel's optimism that it can supplant bespoke developments.

Instead, firms will look to integrate front- and back-office systems to provide a view of entire business processes, such as order fulfilment.

"Where firms have already spent on CRM, they are much more likely to look to work with big systems integrators," said Evan Kirchheimer, lead analyst at Datamonitor.

The market watcher said that spending on CRM software actually fell in 2002, and that it does not expect to see 2001 spending levels return until 2005.

Worryingly for Siebel, Datamonitor is predicting that it is smaller firms that will spend on CRM. Siebel has neither the products nor the indirect channel to serve this sort of market.

Much of the lustre has been knocked off the one-time darling of the CRM world, as fewer customers have been buying its software.

Siebel has admitted that its shareholder rights plan, a strategy typically employed to prevent hostile takeovers, was a "defensive" ploy.

Oracle chairman Larry Ellison recently dismissed Siebel as a "dying firm".

But talk of an impending demise is premature, according to Nigel Montgomery, research director at AMR Research.

"The time for Siebel to worry is when SAP is beating it regularly in opportunities that are new business for both parties," he said.

And Siebel remains bullish about its prospects. "We have the experience in developing products and going live on implementations," said Morgan. "We're not going to merge or be acquired."