|Can PeopleSoft Derail Siebel?|
Tue Oct 1, 1:27 PM ET
Erika Morphy, www.CRMDaily.com
Can PeopleSoft ( Nasdaq: PSFT - news) overtake Siebel ( Nasdaq: SEBL - news) in the CRM market? It is an interesting question -- one that might seem like the wrong question to those waiting to see whether SAP ( NYSE: SAP - news) is developing enough muscle to knock Siebel off its throne.
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It is true that PeopleSoft has been quietly positioning itself to dominate a unique market space, Forrester Research analyst Bruce Temkin told CRMDaily.com. "Can PeopleSoft cut into Siebel's dominance? The answer is absolutely yes," he said.
To be sure, PeopleSoft has infused new energy, not to mention money, into its CRM division over the last two years. Brad Wilson, PeopleSoft's vice president of marketing and recent E.piphany ( Nasdaq: EPNY - news) veteran, told CRMDaily that the ERP (enterprise resource planning) vendor has been investing heavily "in the platform, in the overall architecture of the underlying application suite, in the actual CRM applications and in the people."
In fact, Wilson said, PeopleSoft just poached four new staff members from E.piphany and Oracle ( Nasdaq: ORCL - news).
Siebel Still Dominates
Even so, dislodging Siebel will not be easy for any vendor. For all the troubles besetting the company -- and there are many these days: plunging profits, layoffs, an eroding customer base, a recent research report that showed many Siebel customers are unhappy with their application, and a number of other vendors nipping at its heels, to name just a few -- Siebel's early grab for market share, rich feature set and aggressive vertical strategy still leave it firmly lodged in the number one position.
"Last year, Siebel reported US$2.2 billion in revenues," AMR Research analyst Kevin Scott told CRMDaily. "The vendor that came closest to touching that was SAP (NYSE: SAP), whose CRM revenues we estimated to be just under $1 billion. That is a hard gap to make up."
In certain areas, it is unlikely that PeopleSoft -- or SAP, for that matter -- will overtake Siebel. PeopleSoft's industry-specific apps (basically, templates that keep the horizontal code intact, according to a Forrester report) do not stand a chance against Siebel's detailed vertical apps -- except perhaps in e-government, an area in which PeopleSoft has a very large installed base already.
Where PeopleSoft Excels
In other areas, PeopleSoft makes a good case as an alternative, though. Its sales force automation (SFA) module easily goes head to head with Siebel, Scott said, "because that is where PeopleSoft grew up."
Or, consider its contact center application. Until recently, Siebel was unsurpassed in its ability to handle large-scale call centers, Temkin said. "PeopleSoft will make inroads there, especially with its new release and the release planned for later this year."
There are other functions that PeopleSoft handles well, Temkin added, including campaign management. However, "people are spending a lot of money in the call center space right now, and Siebel has dominated this space for the most part. So the call center is an important competitive ground."
Trying To Be Friendly
Then there is CEO Craig Conway's focus on making PeopleSoft CRM much more user-friendly. Reportedly, CRM 8.8, scheduled for release in the fourth quarter of 2002, dramatically improves the user interface. In general, CRM applications are not user-friendly, and Siebel is no exception. To be fair, Siebel addressed this issue in its 7.5 release by linking together once-disparate functions, Siebel vice president and general manager Kevin Nix told CRMDaily.
For example, the sales forecasting process was once a series of separate steps that a user had to know how to knit together, he said.
But 8.8 is looking pretty competitive as far as user-friendly interfaces go, Temkin noted. "According to Conway, users will be able to create a new customer record with just three mouse clicks" compared with seven or more in other applications.
PeopleSoft's biggest advantage is its integration into back-office processes. "PeopleSoft CRM is a better fit for situations where the information that resides in back-office systems is critical to a customer service operation," Scott said.
This argument resonates especially well with PeopleSoft's installed base, which the vendor has been aggressively mining. Last quarter, the company said it added 75 new CRM customers –- half of which came from existing clients, including such companies as Manugistics, Sybase, Crestone International and Norstan.
"There is a growing compelling argument that the cost of ownership for a CRM application can be dramatically lower if a company stays with the same vendor that supplied its back-office system," Temkin said. In fact, this is the main reason why SAP poses a bigger competitive threat than PeopleSoft, he added.
Trend Toward Small Projects
Then there is the fact that the other half of PeopleSoft's new client wins did not use any of its other applications.
The trend in CRM these days is toward smaller projects with near-term results, which is not where Siebel excels, Wilson said. "But they still want to select a vendor with enterprise vision."