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Users inquiring via the Siebel Web sites for local resellers were told: "We have discontinued our reseller line and are now only selling direct through Siebel representatives."
Steve Garnett, vice-president of Global Alliances for Siebel, said that when products were delivered through an alternative channel, customers did not get the return on investment (ROI) on products that they should have been getting.
To combat this issue, the company has decided to change the licensing model. "[Resellers] will no longer make margins on the licences, but can sell additional consulting services around these licences," Garnett said.
The implications of the decision are profound. Resellers wanting to purchase Siebel's mid-market edition of CRM software must either go direct through a representative or through one of two rival distributors, Navision and Great Plains.
One former reseller in the UK said that because his company had committed funds and training resources to selling Siebel products, the decision would have a devastating effect on his business. Moreover, since the company had moved from a two-tier to a three-tier sales strategy, margins would be tighter.
Sandy Fitzpatrick, a senior analyst with Canalys, described the strategy to bring the sales operation in-house as "ludicrous".
"In such hard times, any vendor prepared to bypass its channel is doing the wrong thing," Fitzpatrick said.