Cloud Computing Killed Siebel – Will You be Next?

Everyone knows how salesforce.com crushed Siebel a few years ago, to become the de facto standard in CRM. What started with a win in the On Demand CRM battlefield, has now revolutionized the delivery of software through cloud computing. Legacy software vendors under attack from newer cloud providers, are scrambling to protect their turf, like Siebel tried to do in the early part of the decade. However, most of these legacy vendors are fighting a losing battle.

Take the case of Netage, an established vendor that has been providing CRM to Financial Services. Netage will continue to lose deals to Navatar (read River Cities Capital Funds has selected Navatar’s Private Equity CRM over Netage Dynamo). The reason is simple: for a legacy vendor like Netage, winning the cost/value battle against a cloud provider like Navatar is next to impossible unless they can rethink their entire business model.

Legacy vendors typically give the cloud a try, as a defensive move – they launch a hosted offering, available through the internet to avoid losing business. They often try to save money by using all or some of their existing on-premise infrastructure and practice for their hosted offering (masked as a cloud offering), by avoiding the investment in a new technology infrastructure that supports multitenancy. However, the high cost of replicating and maintaining instances for each single tenant (or customer) eventually catches up with them, and their margins get lower as each new customer sucks up more resources (read Why Multitenancy Matters in the Cloud to learn more).

It isn’t just smaller companies – larger companies such as Oracle are faced with the same issue when it comes to competing with cloud providers (read Oracle Cloud Computing and the CFO?s Dilemma). But because of their size and scale, larger companies like Oracle have the ability to change the market demands/dynamics and fight the battle on a different turf.

The clock, in the meantime, is ticking for most other legacy software providers. If all they do is launch a cloud offering in addition to their on premise offering while maintaining the same business model, they will die soon. Their survival will depend on whether they can make a complete transition to the cloud world.

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46 Responses to Cloud Computing Killed Siebel – Will You be Next?

  1. Michael Topalovich April 26, 2010 at 8:55 PM #

    I don’t know if I’d go so far as to say salesforce.com “crushed” Siebel. Salesforce.com just had their first $1 billion year after 10 years in business, Siebel was a $2 billion company that still maintained a huge market share advantage at the time of the Oracle acquisition. I haven’t looked into current numbers, but I would wager that the integrated Siebel assets still generate significantly more revenue than salesforce.com.

  2. Allan Siegert April 26, 2010 at 9:13 PM #

    Michael is no doubt right that Siebel is a cash cow. Just like Lotus Notes is probably a cash cow.

    Regardless, Siebel’s future was crushed by salesforce.com. It’s now a dead man walking but, as Michael points out, still earning a nice living off legacy contracts.

  3. Osama April 27, 2010 at 12:44 AM #

    Well I strongly believe that no doubt the cloud computing model has overcame the on premise market, but still the current market of on premise version will be maintained. There is not as such mature CRM product like Siebel. I think most of the people would agree on that.

    Small and Medium scale companies will surely go into the cloud computing market and buy these on demand CRM models like Salesforce.com, Oracle CRM On Demand or evern Sugar CRM. But the large enterprises such as Banks havent been seen selecting on demand products. They still work on on premise version like Siebel. Companies that are more worried about their data, will hesitate a bit in moving to cloud.

  4. Faisal Iqbal April 27, 2010 at 4:36 PM #

    salesforce.com can reduce the share of Siebel in Small and medium enterprises but killing Siebel CRM is a very big word.
    I know a 45 million Dollar Siebel CRM implementation in Pakistan. salesforce.com need years to achieve that in pakistan

  5. Mike Davis April 27, 2010 at 6:34 PM #

    Alok,

    Your post is timely. I work for a small venture firm that is looking at cloud solutions to manage our fundraising and investor relations. In our research, we came across Navatar as well as Salesforce.com’s venture capital solution. Even though you’re a Salesforce.com partner, doesn’t that put the two of you at odds? It’s not inconceivable to think you might someday be “designed out” by Saleforces.com – a phenomenon I’ve witnessed between Microsoft and its partners.

    Curious to learn more. Thanks for your insight

  6. Jan Klincewicz April 28, 2010 at 1:20 AM #

    I used Siebel at HP and Salesforce.com at Citrix. I would not award either any prizes, but given a choice, I’d take Salesforce. I think Siebel would be fine for selling refrigerators or forklifts.

    For multi-part software-hardware-and services SKUs it was not very flexible.

  7. Techno-Pulse April 28, 2010 at 11:41 AM #

    Indeed, the road ahead looks smooth for SaaS providers viz. Salesforce.com. In emerging economies like India, the market is quite price sensitive, & there are 1000s of SMBs who will need software of some kind to compete globally. Here’s a golden opportunity for the SaaS providers “Fortune @ the Bottom of Pyramid”…

  8. Sam Ortega April 28, 2010 at 8:13 PM #

    Interesting to learn about the 45 million Siebel adventure from Faisal. I’m surprised they spend that much money in Pakistan. Here in America we don’t spend those kind of dollars on anything anymore.

  9. Alok Misra May 3, 2010 at 2:03 AM #

    I can remember my Deloitte and PwC days, where a multimillion dollar services opportunity related to implementing and maintaining Siebel used to get our juices flowing. So I can certainly see how Siebel is still generating cash for some and I think that’s great. However, as Sam points out, few want to spend money these days on multi-million engagements — unless, of course, you are MTA in New York. MTA gave $200m to Lockheed Martin to implement a subway security system and got nothing but a lawsuit in return.

    Mike (Davis), to your question, there is some competition always in the tech industry. Here’s a good blog on that:

    http://smoothspan.wordpress.com/2007/10/01/platform-vendors-have-to-be-switzerland/

    Salesforce.com has done a phenomenal job of marketing their CRM and platform to the world. Their product managers today are primarily focused on how to put Force.com in the hands of Java developers. Navatar’s product managers are focused on how to improve and enhance operations for the investment management community. Although few can predict the future, our goals are very different and complementary.

    Also, here is a good discussion related this blog, that I thought I’d highlight:

    http://groups.google.com/group/cloud-computing/browse_thread/thread/4098f7caa2a16b4a#

    Here are some good points made, that are worth a mention (I tokk the liberty of extracting some quotes):

    …I do agree with you that “shy attempts” to transition the software delivery model to the cloud without rethinking the whole business model is doomed to failure…
    – Fabrice Cathala

    …There is a significant difference in skill set between burning CDs and operating a large datacenter 24/365 globally…..This is going to be a painful ride for incumbents and their ecosystems. The ones that embrace SaaS aggressively, soon, have a chance. The rest will become the Burroughs, DEC or Wang of this generation.
    - Ray Nugent

    …there are additional protectors of legacy within small, medium and large enterprise – real IT departments whose employees have kids to feed and put through colllege. The larger the enterprise, the more intransigent the IT department is to moving from legacy. Change is painful and represents a potential career-threatening move for the pioneer within the IT department who presents a vision that may ultimately not be realized….
    - Dave Corley

    …It’s very hard for existing vendors to incur the chance of losing revenue in their existing market to move in a timely fashion to a new opportunity… Cloud Computing is likely to enable a new set of vendors and change many in the older set from market leaders to legacy maintainers…
    - Amy Wohl

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  11. Nauman June 10, 2010 at 2:03 AM #

    It is true that Siebel on-demand is not a strong competitor as compared to sales force but after Oracle acquisition, Siebel has a strong future. Oracle has acquired Sun, so may be future development of Siebel will be done on Java, making Siebel more flexible. But Oracle has to do a lot to make Siebel stronger, as after Siebel 7.7, no major change has done in Siebel, apart from Oracle Logo.

    Siebel would have long gone, but Oracle has saved it. Previously major implementations of Siebel were in US and Europe, now it has gained market in Asia and Middle East, due to strong presence of Oracle.

  12. Lily June 24, 2010 at 11:15 AM #

    I’ve found an organisation called Servage who apparently have a groundbreaking service. It’s always hard to tell whether something is going to take off, especially with so much hype but the landing page looks cool! http://www.servage.com/. Have checked out their Twitter page (twitter.com/totalcloud)but seems they are waiting for the launch before tweeting their own news…..

  13. Faisal Iqbal July 3, 2010 at 9:19 AM #

    I have a requirement please suggest CRM and expected cost.

    1. Telecommunication implementation which has 30+ million active subscribers.
    2. Offers Mobile (Primary) + Landline, GPRS, GSM, Broadband and other.
    3. Every Technical Element in Physical network is managed by Order Management in CRM.
    4. Billing System is integrated with CRM in Real time.
    5. Product Catalogue managed in CRM has 1000+ product combinations possible.
    6. 75 k expected daily Orders
    7. 1500 Customer care users with CTI integrated CRM at any instant of the day
    8. CRM Database space is 8 Tera

    9. Sales + Service + Marketing and Business Analytics working on same data. Data warehouse also contains network usage data (SMS/users, Calls in particular night)

    10. Business Analytics will be used for creating campaigns and Analyzing responses

    11. Two competitors (Global companies) creating stiff competition

    Regards,
    Faisal Iqbal

  14. Alok Misra July 11, 2010 at 6:02 PM #

    Hi Faisal,

    It sounds like a complex implementation. We would need more information, of course, to provide any advice. Please feel free to reach out to sales@navatargroup.com and we’d be happy to chat, if that works for you.

    Regards
    Alok Misra

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  42. Peter April 1, 2012 at 2:23 AM #

    Actually I’m working with Siebel, and … from a point of view of Software Architecture, I have not found a justification for use Siebel. We are using in Financial services, but … I don’t know if Siebel is a good solution. What is the real advantage for use Siebel ??. Regards

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