Siebel

  • September 29, 2015
  • df-logo1What a difference a decade makes. Ten years ago, the booths on the Dreamforce show floor were little more than outposts for widget-makers but fast-forward to Dreamforce 2015 and one is struck by the number, variety, and size of the partner community. But that’s only part of the story, often out of sight is the sizeable display of talent that has consolidated around Salesforce from other industry sources.

    A little more than ten years ago Salesforce was a precocious upstart vendor of SaaS computing and Siebel was the top dog—the first billion-dollar CRM company—and it held a large proportion of the available CRM talent. But at this year’s Dreamforce there were numerous Siebel alumni all drinking the Salesforce1 Kool-Aid.

    Former Siebel EVP, David Schmaier, after a sabbatical from the industry, started Vlocity, a company dedicated to making vertical market apps for healthcare, financial services, and insurance. Vlocity takes a page from Veeva, a highly successful company in the pharmaceutical space started by Siebel alumnus Matt Wallach and Peter Gassner (Salesforce, PeopleSoft).

    Anthony Lye, (Siebel, Oracle and others) now CEO of HotSchedules a cloud service application for the restaurant industry, was prowling the floor. Kevin Nix and Narina Sippy ex-Siebel stars are spinning up Stellar Loyalty. Steve Mankoff is now a general partner with TDF Ventures and was keeping tabs on some of his investments. And Bruce Cleveland, former GM of Siebel and now general partner with InterWest Partners was not seen but his presence was felt in companies as diverse as Aria and Vlocity.

    The presence of so many old CRM hands concentrated as they are around Salesforce will likely help further accelerate the company’s growth—certainly the potential is there. The partner keynote delivered by EVP Tyler Prince, revealed a $135 billion revenue opportunity calculated by Salesforce over the next 5 years. Even if you discount that by a large factor you will still be left with a lot of billions. That’s one reason so many industry veterans are attracted to Dreamforce.

    The companies in attendance have dramatically grown in stature over the last decade and the show floor included many public companies or future IPO outfits including in no order, Xactly, FinancialForce, Zuora, Vlocity, Apttus, Full Circle Insights and about 390 others. Many of this group rented storefronts around the Moscone Center to provide meeting space and hospitality to their customers and prospects. Most also sponsored big parties and scheduled user events coinciding with Dreamforce to further induce customers to attend. Apttus raffled off a Tesla, FinancialForce sponsored a scotch tasting (full disclosure: I tasted the scotch but did not win the Tesla).

    At the same time, Salesforce was trying to get a few messages out so there was plenty of discussion of the new Lightning UI for desktops and laptops. Significantly, the UI was announced last year but only for mobile devices—a demonstration of the importance of developing for the small screen first these days. The company also announced SalesforceIQ a rebranded absorption of RelateIQ for SMBs and the enterprise. The IQ product is designed to capture inferential data and turn it into useful things like new meeting appointments and follow up actions without requiring the rep to manually enter the data.

    To go with Lightning, Salesforce introduced an IoT cloud powered by Thunder, the company’s initiative to corral the billions of devices that will need cloud connections by 2020. There were also specific keynotes for every cloud in the company’s kit and those announcements were way too numerous for this piece. Fortunately they are all preserved on YouTube.

    But the biggest bang comes whenever Salesforce assembles a gang of smart people to talk about the future. They don’t do it every year and perhaps that’s wise since major change of the type they like to discuss follows more of a punctuated course, like an EKG.

    This time they had a lively discussion about what happens when Moore’s Law and Metcalf’s Law collide with business in a big way. That intersection is best explored at length in The Second Machine Age and Race Against the Machine both by Brynjolfsson and McAfee of MIT’s Sloan School and their ideas were referenced more than once. You may have read those names here a few times prior to this. The questions they ask, which we are still searching for answers to, are of the type, what happens when machine intelligence becomes good enough to begin replacing humans at knowledge work.

    We’ve all seen automation replace rote manual activities in business thus boosting productivity. The standard explanation is that the human resources are liberated to pursue higher-level value-add. But the rise of the service economy with its lower wages and hard to find jobs suggests that the future might not be as rosy. What happens when “there’s an app for that” means a pink slip?

    Happy outcomes don’t automatically happen but the track record since the Industrial Revolution suggests that not only do new jobs spring up but also new kinds of jobs; an easy example is the software industry analyst. No one I know went to school to become an analyst—I certainly didn’t. There is no room for complacency though. Machines are now capable of writing reports in reasonably good English (though doubtless without the same panache as yours truly). It’s different this time; replacing manual labor is one thing but replacing thinking is much different. It will be a very different ballgame as Jeremy Rifkin writes in The Zero Marginal Cost Society when everyone has a computer and a 3D printer. That’s something the Salesforce brains trust didn’t get to this time.

    Deep futures aside, it’s inescapable that the next shift in the front office and the enterprise will be adopting many of the platform technologies displayed on the show floor in order to support more automated processes which are rapidly replacing the transactions we’ve grown to accept in many vendor-customer interactions. Process isn’t exactly a new watchword yet but vendors like Salesforce and others are delivering increasingly capable suites that will make a shift to process rapid once it officially starts. (It has started, you might now see it but you also don’t want to be the last adopter.)

    Also, kudos to founders Parker Harris and Marc Benioff for putting themselves on the spot and taking on some tough issues like sponsoring a Women’s Leadership Summit. They sat down for some interesting dialog and hard questions from Kara Swisher, Co-Executive Editor, Re/code about how to provide better opportunities for women in the tech industry. It was not an easy discussion because if you watch the video, you can see everyone trying to puzzle it all out. But Benioff and Harris didn’t shrink from it and expressed a commitment to put the issue at the top of their agenda (heck the summit was their idea). Though more needs to be done, you can’t put Salesforce, even today, in the same category of many older tech firms and the presence of women in the conference was notable. Still we need more.

    So to net this out, Dreamforce had its requisite cornucopia of products, announcements, and invention. But it also held out some provocative insights into the future of work and our society, two things that will drive demand for its products and services long after this year’s new wiz bangs are history. To me that’s why you go to Dreamforce.

     

    Published: 2 years ago


    Salesforce CEO, Marc Benioff

    Salesforce CEO, Marc Benioff

    Some of the drama over the rumored acquisition of Salesforce.com by a larger software industry rival could come to a head today when Salesforce CEO Marc Benioff and his Sage counterpart, Stephen Kelly, share a joint press conference in San Francisco.

    For weeks the rumor that Salesforce was being courted have been fueled by speculation in the financial press about Salesforce’s apparent engagement with investment bankers. The speculation was that it was figuring out how to deal with an unsolicited offer but all along I have felt that the signals were not very strong and that a Sage deal made more sense. I think Salesforce will take a minority position in Sage, in part as a good will gesture.

    There was plenty of evidence if you knew where to look. Salesforce and Sage had made a joint announcement in the first quarter about Sage porting some of its accounting software to the Salesforce1 Platform and becoming a member of the Salesforce ecosystem. The existence of the press conference, being billed as a fireside chat, and the general plan, has also been known for two weeks.

    On the other hand, the rumormongers failed to produce any solid evidence about who an acquirer might be and relied on hearsay and unnamed sources to build its case. The thing that tips the balance against the rumors for me is that so much that has gone on has been done behind closed doors. In a takeover attempt you normally see a lot of posturing and negotiating in public. Recall the spectacle when Larry Ellison’s Oracle decided to buy PeopleSoft and Siebel. Now, those were acquisitions!

    We will know in a few hours, or not. Just as a paranoid might have real enemies, Salesforce could still be being pursued. But, if Salesforce were to invest in a piece of Sage, it would complicate the calculations of its valuation and could tip the balance against acquisition. I suppose you could view this as a form of poison pill.

     

     

     

    Published: 3 years ago


    We are nearing year-end and that means it’s time for my annual year in review.  This is not an attempt at a quantitative inventory just my assessment of things that happened that will matter in the long run.  From my spot it looks like marketing took a big step towards greater relevance in 2013, the importance of being a partner in an ecosystem increased as did the significance of software platforms, and reports of CRM’s demise were greatly exaggerated.

    Marketing

    It’s not just the fact that Oracle bought Eloqua that made marketing significant and the price reportedly paid, $800 million, still seems light to me.  Marketo had a successful IPO, Microsoft bought Net Breeze and Marketing Pilot, and Salesforce.com declared its Marketing Cloud.  In 2013 marketing was definitely on the agenda.  It also helped that all of the above mentioned companies did something revolutionary for them.

    Instead of killing their new acquisitions by trying too hard to fit them into the corporate portfolio, the big buyers of 2013 let their new acquisitions figure things out for themselves.  You could argue that bringing marketing expertise into some of these companies increased their MQ (marketing IQ) significantly and that they had no choice but to let the experts run things for a bit.  The buyers didn’t have much clue in some cases and were more or less forced into it.

    The approach worked so well that by fall marketers had firm control of their agendas and were leveraging their new companies’ considerable resources to go to war.  The best example was the Eloqua Experience user meeting held in San Francisco that attracted a crowd of “modern marketers” sufficient to fill the Hilton Hotel to overflow.  Today, Oracle seems to be one of Eloqua’s biggest customers and you can sense it in their go to market approaches.  Kudos to Marc Organ, Thor Johnson et al who got the ball rolling ten or so years ago but who were not involved any more by time the big payday came.

    The Partners

    The traditional partner channel got an upgrade too.  Typically, moving to a channel strategy is a great idea for maturing companies that want to reduce overhead by getting someone else to sell for them.  Older products under price pressure and margin erosion are frequently what partners get but in 2013 that was less obvious.

    The leader in the new channel was Salesforce whose partners leverage the core platform to build an impressive array of new products in all areas of the front office and beyond, rather than just adding a little implementation value and customization to an established product.  Salesforce’s channel strategy is unlike almost any other.  Everybody wins.  Salesforce has a greatly expanded sales team selling its product and the partners have a well-defined platform and source of raw material on which to build.  Everybody wins in this scenario, which is why item three on my list is platform.

    Also in the partner bucket, Sage decided to simplify its portfolio by selling SalesLogix and ACT! so that it can concentrate on selling SageCRM.com.  It’s a good idea but this traditional ERP company still has to prove it understands the CRM market beyond cross-selling it to its accounting customers.

    Platform

    Partners and platform reached a crescendo at Dreamforce when Salesforce introduced Salesforce1 calling it a “customer platform” that incorporates Force.com, Heroku, all of CRM, ExactTarget Fuel, and some other bits.  Whether you are a partner or an enterprise looking for a Swiss Army knife software tool, Salesforce1 might be what you are looking for.  The company went into hyper drive and developed an order of magnitude more APIs that brought it all together so that older apps could peacefully co-exist with newer stuff from all of its acquisitions in a single entity that it hopes will drive enterprise computing for many years.

    Salesforce is not the only player in the platform space but they’ve typically given themselves a year grace while the rest of the market catches up.  Look for Oracle, Microsoft, and SAP to be all over platform in 2014 like white on rice, like a cheap suit, like a junkyard dog, but I don’t want to over state the issue.

    CRM’s Demise

    People have been calling CRM’s demise or at least its radical restructuring since the Clinton administration and they’ve been right but it’s still here.  In a late 2013 report, Bluewolf, the consulting group, was at it again.  This time, in the company’s second annual survey of the Salesforce customer base, it found that many customers think community will be the new or next CRM.  I think this has a lot of validity but…aren’t we already there?  To a degree we are and most market observers would, I think, agree that the traditional silos are being rapidly bridged by social to enable greater and more instantaneous information sharing throughout the enterprise.

    Nonetheless, the importance of the Bluewolf study is not to state the obvious, it is to put a marker down saying watch what happens from here.  As the front office continues to socialize you will see more new apps and sectors with increasing benefits.

    Siebel at 20

    It would be wrong to end without a tip of the hat to Siebel.  Bruce Daley pointed out to me that Siebel turned 20 over the summer and to celebrate he re-launched the Siebel Observer to deliver insights on the company and the market on a frequent basis.  Siebel is important for multiple reasons.  It is the grand daddy of the industry and many of CRM’s brightest stars got their starts there and are now populating numerous other companies and I am happy to say many are friends.  Siebel is on a very short list of companies that matter in CRM’s history along with Salesforce and Oracle—Tom, Marc, Craig, Zach, Bruce and many others all came from there and were Larry’s protégés.  If you have followed them for any amount of time, last names are superfluous.

    There were many other highlights during the year and others will no doubt offer their analyses and insights but for me, it’s it and that’s that.

     

    Published: 4 years ago


    Siebel saved my life.  Not really but sort of.  By the early 1990’s I had been selling software for what seemed like a lifetime and dealing with the typical frustrations of life in sales.  There weren’t enough leads and there was always more work to do than you could squeeze into a day.  I kept records on legal pads and file folders and I had a Rolodex that I would never update because it was way too much work.  And then there was forecasting.

    Fortunately, I was young and gifted with a great memory so I could remember everything that was relevant in a deal.  Beginning in the 1980’s I had worked for a succession of DEC partners and I found that I could memorize whole catalogs — VAX and PDP-11 were separate — without trying.

    But, yes, Siebel saved my life because by the early 1990s I was burned out — the mini-computer boom was fizzling, the dotcom boom had not yet started, and there was a recession which made everyone skittish about installing systems on PC networks because they were also skittish about network operating systems.

    Finding leads was hard.  No one would spend much on marketing and bingo card leads were of such low quality that it was easy to return them to marketing with a heavy dose of scorn.  Cold calling was a way of life.  There was no Internet to speak of and researching prospects was tedious.  The early market euphoria in which every company was a prospect had given way much too quickly to a war of attrition.

    I was not a Siebel user but it nevertheless saved my professional life because it showed there was a better way to sell that didn’t involve dialing till you dropped, unmanageable paper records, and monthly forecasts — little fictions whose greatest quantitative attribute was that they were rendered in spreadsheets.  Siebel wasn’t even the first tool of its kind.  ACT! and Goldmine were already on the market but Siebel took what had been a single user experience and made it germane to selling in the enterprise.

    It would still be many years after Siebel’s founding before we would see integrated marketing and customer service but true to form Siebel was one of the leaders in consolidating the CRM suite at a time when public companies would buy other companies in simple swaps using their stocks like cash.

    Siebel also hired aggressively.  EVP David Schmaier would routinely visit his alma mater, Harvard Business School, each spring and round up its best and brightest for export to San Mateo.  As a strategy it worked reasonably well and the company was always awash with smart, talented people, not just the Harvards by the way.  Many of them are still in The Valley, populating other companies including Oracle where some settled after the buyout.  Today having Siebel on your resume is akin to having Oracle or HP back in their heydays.  It says you were first, you were prescient, you’re a survivor

    The company was never loved, in my estimate, and that is a key lesson for all those who come after.  They played by a script that was pure Geoffrey Moore.  Not that Moore is like that, I don’t know him.  But in “Crossing the Chasm,” Moore set down some absolute truths about how paradigms shift and how the eventual winners conduct themselves.  Early markets are take-no-prisoner ground acquisition games. Capture as much territory as you can to deny it to your competitors; deal in a general-purpose product and accept customization ideas with great reluctance and great cost; expect the customer to figure it out and provide adequate but no frills support because most of your energy is dedicated to capturing more, more, more.

    It was a brilliant strategy that some might say was invented at Oracle so it was only commonsense that Tom Siebel and several other titans of today’s software landscape would come out of that culture.  But the strategy has a down side too.  As I say, Siebel may have been respected for its execution but I doubt if it was ever loved in the way that Apple was loved, for instance.

    The lack of love made it easier to accept the assertions of an upstart analyst firm at the time that Siebel’s marquee customers could not show an ROI.  A scandal erupted that took a good deal of wind out of the company’s sails.  Then, too, a Gartner analyst famously forecasted in off the cuff remarks that half of all CRM efforts would fail.  Many people grasped at these factoids like they were drowning.

    If all you read are the headlines, then your world is rather black and white but if you delve just a bit deeper you understand that the world is rather gray and this situation was no exception.  Frustrated by the charges that the company believed were bogus, they hired me to evaluate not the charges but their customer base.  My partner at the time was fellow Aberdeen analyst Harry Watkins who happened to hold a Ph.D. in Marketing and also taught at the university level.

    Our work was clean.  We were separated from Siebel by three thousand miles and given broad latitude to question their customers.  What we discovered in many cases was exactly what Geoffrey Moore might have predicted.  Major corporations had bought Siebel because it was the market leader and because they didn’t want to lose a step to a competitor.  They were early adopters after all.  The result, our research showed, was that a whopping half of the customers never bothered to conduct even a rudimentary needs analysis before or after purchase.  Many could not quote an ROI because they had no relevant starting point to compare with.

    Also, in a great bit of statistical analysis, Watkins discovered that some of the companies that were reporting ROI numbers were among those who failed to perform that needs analysis.  When he compared this group with those who had actually performed needs analyses, he found that in aggregate the faux reporters had lower ROI to report.  Our conclusion was that without a valid starting point for ROI the faux reporters either developed amnesia about how bad things had been prior to implementation or they’d downplayed their results so as not to contradict the evident truth of the herd and the headlines.

    When we published the results, a few people in the industry, whom we had thought of as friends, demanded our heads on platters.  It was all good fun.  But that’s not the whole story.  In direct follow up interviews with some customers we discovered additional truths.  Siebel really was hard to use, especially for people who had never followed organized business processes and organizing sales people of that era was like rustling cats.  Its client-server architecture, the most advanced for the times, required a great deal of handholding.  One major company I spoke with had three teams of technologists dedicated to Siebel — one each for the last release, the current release, and for the next one.  They were tired but curiously not angry.

    Siebel had the lifecycle of a meteor — a bright youth and an ignominious end.  In subsequent years, relative newcomer, Anthony Lye would do much to integrate Siebel into Oracle and flesh out the product line with a SaaS architecture and many auxiliary functions — other free standing companies bought with Oracle cash to fill out the very complete suite we see today.

    Siebel got started in 1993, which means this is the twentieth anniversary year of its founding.  A lot has happened in the interim.  Siebel is no longer a standalone entity having been acquired in a greater version of stock market brinkmanship than even it had participated in during its growth phase.  But in many ways, Siebel still is the market.  Go into a Global 2000 company and you will see a Siebel system; today Salesforce users might flank that system’s users too.  For many of these companies Siebel is a workhorse system that has been through some of the wars and continues to be serviceable.

    But markets and vendors are changing.  Oracle has Fusion and is slowly merging it with Siebel while Salesforce continues to be the juggernaut that prematurely challenged Siebel in a joust of jests.  If you follow Bruce Daley’s recent survey work the customer base is in good shape so you might wonder what’s next.  Customers seem to genuinely like Siebel these days, a good omen for sure.  But current mainframers still love their big iron too.  For all that, however, we aren’t building and selling mainframes very much and the installed base is shrinking if only because COBOL/CICS programmers want to retire and kids in school today don’t want to be big iron museum docents.

    So where is Siebel at twenty?  Somewhere in middle age.  There might be a Siebel named product twenty years from now but it will be very different from what we have today, which s very different from what we had ten years ago.  By and large, that’s a good thing.  So, happy birthday Siebel.

    Published: 5 years ago


    Sage’s introduction of SalesLogix for cloud computing has caused me to do a lot of thinking.  The operative terms we use in the industry for software functionality delivered across the Internet is SaaS or now cloud computing and numerous vendors find themselves twisting themselves and the definition into barely recognizable forms.  Enough of this I say, let’s do a re-think.

    If SaaS and cloud computing are mysterious to you, let me provide some background.

    I started covering the field (it wasn’t a market yet) in 2000 and I devoted my practice at Aberdeen Group to it.  In those early years other terms dominated the discussion, notably, hosted, on-demand and ASP.  All applications were hosted and available on-demand but the earliest distinction, one that persists today, was between ASP’s and multi-tenant solutions.

    Briefly, ASP’s or application service providers offered client server products like Siebel served from a central location across the Internet.  It was slow going and each customer had a single instance of the software running out on the Internet.  It didn’t work out well and many VC funds took goose eggs on their report cards from the ASP’s.

    Multi-tenant was another matter.  Salesforce.com was a pioneer but so were Salesnet, RightNow and UpShot.  Ironically, only Salesforce understood the power and value of its proposition (RightNow got religion a little later) and most treated the multi-tenant on-demand solution as simply a delivery model and not much more.  UpShot was bought by Siebel, Salesnet by RightNow and the debate about superiority abated because Salesforce and RightNow (which hardly competed then) had prevailed.

    Then something interesting happened.  Vendors like Oracle (which bought Siebel) started dabbling in on-demand services and began delivering application services that hybridized the on-demand and ASP models.  They did this by re-architecting away from client-server and supporting applications in browsers.  They then began hosting their applications in a have it your way scenario.  The re-architected applications had been retrofitted to support the multi-tenant model but multi-tenancy was strictly voluntary.  Customers could elect to run their applications as single instances in their IT departments or from a remote data center.

    With multi-tenancy everyone shares a single instance of the application and through metadata configures and customizes their instance.  All data in a multi-tenant system is stored in one server farm with metadata again serving to segregate it.  Some people worry about this virtual segregation but so far it has been resilient to corruption and hacking.  Nonetheless, some vendors offered single tenant solutions to assuage jittery nerves.

    But wait there’s more.

    Terminology evolution continued and SaaS or software as a service and cloud computing have been front and center for several years (in the case of SaaS).  In its quest to differentiate multi-tenant from conventional single tenant, the industry keeps adding differentiators.  SaaS has usually meant multi-tenant and cloud usually refers to a plethora of computing services available on the Internet.  So, raw computing power is also called Infrastructure as a Service (IaaS), there’s still SaaS and cloud seems to refer to platform — the whole computing stack of hardware, operating system, database, middleware, applications and more.

    So where does this leave us?

    In a word, confused.

    The relative dearth of terms has caused us to re-use what we have in ways that have confused the market.  I also do not leave out the possibility of savvy marketers hitching a ride on a popular term to bend it to mean whatever they need it to, which lead me to my opening paragraph.

    So I propose the following.

    ASP is the new term used to describe a single tenant implementation in some remote data center that serves applications across the Internet.  A vendor that serves multiple customers with this architecture would be said to be delivering an application service in single tenant mode. Full stop.  No need to apologize for it.  If that’s what the customer wants then sell it to them.  It doesn’t have all the advantages of multi-tenant cloud computing but some people clearly don’t see these things as advantages anyhow.

    SaaS refers to multi-tenant application delivery across the Internet.

    Cloud computing is an umbrella term encompassing ASP and SaaS as well as IaaS and Platforms.  ASP’s and SaaS providers may very well use infrastructure from other cloud providers as Sage is doing with SalesLogix.

    My whole point in doing this is simple.  I think the industry and the market are mature enough for us to develop some new terms or possibly adapt an old one.  Since there are obviously several models for delivering software as a service, why not differentiate enough to give concreteness to them?  Calling everything SaaS without qualifiers is not helpful to the market or the customer and the confusion it can cause can only slow down a sales cycle and who needs that?

    Published: 8 years ago