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.
All right! Recess is over! If you went to Dreamforce last week you can be forgiven for taking a kind of victory lap in your head today because it was a truly great experience, besides if you are like me you are still tired. One reason I think so many people like Dreamforce is its relentless focus on the future and on what will likely become standard practice in the not too distant future. But also, if you went to the keynotes from M.C. Hammer to Colin Powel to Richard Branson to Tony Robbins, you left San Francisco with a certain “lightness of being.”
However, if you are an analyst you need to put all of that behind you and get ready for Oracle OpenWorld (OOW), which promises to be a barn burner for its own reasons. Same city, same Moscone Center, same closed Howard Street, similar large crowd — where Dreamforce was all about the social enterprise, OpenWorld is about a lot that might not be so clearly connected. There’s hardware and operating systems and then software for the back office, front office, databases, middleware, and development tools. There are things I’m leaving out too like the America’s Cup. At OOW Oracle will provide a glimpse of its own into what the future looks like for the enterprise and in some ways it’s very different from what Salesforce is talking about and in some ways they are similar.
This is not to say that one vision is less good than the other, far from it. The competing visions reflect different world views and different realities. For instance, while Salesforce approaches things from a clean slate perspective, Oracle takes the view that what it introduces has to work with what delivered before. You can see this in its disciplined approach to supporting customers of the companies it bought way back in 2005.
Companies like Siebel and PeopleSoft whose products are getting long in the tooth and are prime targets for Oracle’s new offerings that are based on its platform called Fusion. You may recall that Fusion went GA (that’s general availability, not the mid-night train), more or less, at last year’s OpenWorld but it hasn’t exactly set the world on fire and there are persistent rumors that the stuff doesn’t work very well or that it requires a phalanx of consultants to make it do its tricks.
The big hurdle for Oracle therefore will be to convince the assembled multitude that Fusion is real and that the path to the future goes through the intersection of Fusion and Big Iron.
Speaking of big iron, last year the company rolled out some additional gear to complement its Exalogic computing devices. It seems this family of hardware is built and optimized for very big jobs involving terabytes of data gazillions of users. That’s exactly the kind of stuff the growing cloud computing movement might gobble up. Currently data centers are masses of commodity servers in racks running feverishly but without a layer of sophisticated management that would optimize their utilization and reduce costs.
There has been an interesting series of articles by James Glanz here and here in the New York Times over the last few days focusing on the power consumption and pollution caused by data centers. The pollution comes from diesel generators periodically fired up to test the centers’ ability to withstand a power interruption. The consumption is gargantuan.
But a bigger question, for which there are ready answers, asks why so much power demand? Part of the answer lies in how many companies are avoiding the necessary virtualization that will make the cloud much more efficient and sustainable. According to the Times and backed up by McKinsey & Company, which did the analysis, conventional data centers run many CPUs and disks at much less than capacity in part to cater to the urban myth of the need to keep one company’s data separate from another’s.
You’ve heard me on this before using the metaphor that we comingle our funds in banks and overlay the pool of deposits with metadata like account numbers and statements. Why are we resisting do this with data? Companies like Salesforce are already doing the same virtualization in the cloud and Oracle has an opportunity to strongly support virtualization and point to a more sustainable future.
I’m going out on a limb to say yes. Maybe it won’t happen right away but keep in mind that two or three years ago Larry Ellison ridiculed the cloud and now that he has modern hardware and software he’s a big proponent. The next logical step would be to endorse the Exa-hardware as a sustainability tool for a power hungry planet. I’m looking for some sustainability messaging from Oracle and it could even happen.
This is not a digression. Sustainability is not alien to ideas like mobility, cloud, social and analytics, you can’t separate them. I think if Oracle wants to maintain its leadership position with many of the largest companies in the world, it needs to put a stake in the ground and become a thought leader here. The next decade in IT won’t be like the one that preceded it and if Oracle simply comes out with a grocery list for replacing old hardware and applications with more modern stuff it will be missing a great opportunity. At the end of the day people go to these conferences looking for new ideas and things they haven’t seen before. That’s what I’ll be watching for.
I found out about Oracle’s purchase of RightNow, a multi-channel contact center company, when Chris Kanarkus of IDG News rang my cell. Ironically, I was sitting in the departure area waiting for a flight that will take me to the RightNow Summit, the annual user meeting which is being held in Colorado Springs at the Broadmore resort.
Kanarkus was looking for comment, which I am always happy to provide, and lots of thoughts ran through my head that I chose to pass by. The deal was worth one and a half billion dollars at the $43 per share offering price, a nice bump to the share price.
It had been my observation that the stock prices of many companies rose just before or during their user meetings as good news was usually announced there and the financial press in attendance post their scoops. A couple of years ago I watched RightNow’s stock gain two or three points as CEO Greg Gianforte gave his keynote but this year the news appears to be built in to the share price already.
One and a half billion bucks is a lot to spend and that’s even truer for a company that last year generated $200xxx million in revenue. A multiple between seven and eight is usually reserved for less proven and smaller companies with some kind of social angle. But RightNow has been around a while and it’s track record, while sterling made me, at first, somewhat skeptical.
True, RightNow has a great focus on the customer experience and on helping its customers craft great experiences for their customers. Also, it’s a SaaS company with a SaaS strategy that mirror’s Oracle’s which is to say they are multi-tenant but not fanatics about it. However, RightNow is not a Fusion application and Oracle has its share of customer service/call center, call them what you will, apps so they weren’t exactly desperate to get another one. I recall that Oracle paid one billion dollars for ATG, a company focused on e-commerce, so perhaps the company only knows how to write checks with nine places to the left of the decimal.
Seriously though, Oracle, ATG and RightNow might be a thing in the future. Multi-channel communication combined with e-commerce outreach could be very important. Add to this Oracle’s success in what it has called clienteling (sp?) in which store sales associates carry mobile devices that can orchestrate customer centric shopping, and you might see a pattern. If the customer can’t come to the store, perhaps the store will come to the customer.
But this takes nothing away from RightNow’s core strengths today. The company has become something of a missionary bringing the message of customer centricity to its customers. In teaching the religion, RightNow has helped them navigate the social divide and some of that teaching might be very useful to Oracle which has a boat load of older technology products that it is in the process of “Fusing” and those applications need to adopt more socialized approaches. Presumably, Oracle will protect the brand as it has with other acquisitions and Oracle RightNow does not appear to be that hard to say.
Competitively, this is interesting. Salesforce.com another big CRM vendor recently bought Assistly which provides service functionality in an unassisted mode, or to say it differently, it is more of a customer self-service solution for the small business space.
Nonetheless, these are merely starting positions; it’s hard to know the ultimate destination some of these packages will have. Part of that issue resides in a couple of social facts of life. First, socially mediated processes are completely scalable working across the internet equally well for all sizes of company. Second, socially mediated business processes have very low costs and for that reason are attractive to anyone with a pulse especially in this economy.
There are other companies in the market that might make interesting buys for one of the bigger CRM companies and you can start with the CRM Idol finalists — Assistly’s stablemates, CrowdFactory, GetSatisfaction and Stone Cobra. Each does something different and each is worthy of a vote or even a billion.
Finally, we should ask why in the middle of a terrible economy there is so much company buying going on. The answer is that the corporate economy replete with M&A activity and some very good IPO’s this year has little to do with the real economy. We’ve reached a point where some very good but siloed solutions have matured and a time when the big companies have ample cash that they aren’t spending on things like hiring people. Buying a promising company is like R&D spending all bundled up and you get the result more or less right away.
So there it is. Oracle buys RightNow for a king’s ransom. I wonder if they’ll be serving champagne at the Broadmore tonight.
Fusion is big, potentially powerful, based on new technology, backward compatible and not available yet.
Larry Ellison began taking the wraps off Fusion at his Open World keynote on Wednesday. His appearance on Sunday with Sun CEO Scott McNealy was just for poking some fun at IBM, this was the real deal. Fusion is a big idea and this post will leave something out – that’s a given – but here are some important impressions.
There are ten applications and I don’t write fast enough to have copied them all down from Larry’s slide. For sure there was CRM but also GL, Deal Management, Territory and Talent Management too.
The applications are based on SOA architecture, the UIs have embedded BI. There are six thousand database tables, 6,500 objects, 20,000 views, 10,000 task flows and the applications are code complete and being tested by customers.
Fusion is based on industry standards like JAVA Fusion middleware which Larry said is the first such deployment.
Fusion applications are scheduled to debut next year and while that is a little disappointing it is entirely in keeping with the purpose of a keynote – forward looking statements right? Ok.
I saw some demos but as I said in a previous post, I want to see a birth certificate.
Fusion applications are modular and they are designed to be deployed as full replacements for other older Oracle products. Modularity enables them to also work side by side with existing applications so that there is no need for a wholesale replacement. There are also new applications that have no analogs with the older product suites so it is good that Fusion and legacy applications can work together.
Like a lot of CRM products coming out these days, the Fusion applications, based on a SOA architecture are intended to operate behind your firewall in a single tenant manner or at some other data center in either single or multi-tenant mode. This approach neatly straddles the diverse deployment options that some people feel they need today and gives a company like Oracle the flexibility to support all of them with one code set. This neatly solves the problem of how to convert Oracle’s product set from premise-bound to cloud resident by leaving the decision to the customer. That’s good, fine even and it does a lot to close the discussion about on-premise vs. on-demand, or does it?
The trouble with running a private cloud is that as soon as I make a modification to the system I might be making the product unique and unsupportable putting me back into the same version conundrum that many hope to avoid. I need to know more about this.
Interestingly, in no demo did anyone talk about Fusion code or coding beyond Larry’s statement about JAVA. I suspect that is not because you can’t get into coding some arcane part of your application but I hope coding is infrequent and at a level of abstraction sufficiently removed from the guts of the operation to make it possible to have one version of code for the whole planet.
The Fusion applications, specifically the CRM stuff, are compatible with Oracle’s Social CRM gadgets and widgets and I expect that it will offer fairly robust support for enterprise computing when the applications hit the street.
The UI looks nice. I don’t know what the technology is that supports it but it has an Adobe Flex look. Nice job on that – it will give all those Gen Y people coming into sales and other front office disciplines a feeling that they are using something as modern as the games they play on the home computer.
That’s about all I feel qualified to say. We need to see more but for now it is very good to see Oracle redeeming a promise it made a few years ago when it went on a buying spree in the front office market.