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Siebel builds channel sales network

After years of only selling direct, Siebel Systems is taking on partners to help revive its flagging growth.

In a move primarily aimed at small and midsize enterprises, the company yesterday announced it had recruited a dozen consulting and implementation firms in the US, Europe and Latin America to seed its new channel sales programme.

Siebel, which grew into the industry's dominant CRM supplier by serving large enterprise accounts, began eyeing the SME market last year, when it dived into the expanding hosted software market with Siebel CRM OnDemand. But the company continued its direct-only sales strategy, scrapping hosted-CRM maker UpShot's partner programme when it bought the firm in 2003.

Now, Siebel chief executive Mike Lawrie says he expects the company's new consulting and implementation partners to help it reach smaller organisations that prefer to do business with local services companies.

Siebel intends its channel network to be small and exclusive. The company will work closely with its partners and share internal information and sales forecasts with them, as well as training and marketing funds. It is asking its partners to limit ties with other mid-market CRM suppliers such as Microsoft, which has a broad channel network. 

"There's a set of hurdles they need to overcome to be invited into the programme," said Bruce Cleveland, the man Siebel appointed to construct the new channel network. Partners need to demonstrate expertise with CRM implementations and Siebel's products, and to meet Siebel's requirements for sales team staffing and training and marketing investments. 

Siebel's channel partners will be able to sell both its hosted CRM OnDemand subscription service and its SME-targeted, onsite Professional Edition. Siebel defines the SME market as companies with up to $500m (£260m) in annual revenue.

Heading downstream is a common strategy for companies seeking growth. Siebel rivals SAP, PeopleSoft and Oracle have all adopted new SME strategies and initiatives in the past few years as they look for share in a market analysts say is far less saturated than the high-end enterprise segment. Meanwhile, Microsoft is looking to go upstream, building on its desktop applications to enter the low end of the back-end, enterprise applications market.

Siebel jumped into the SME space last October when, in partnership with IBM, it unveiled CRM OnDemand, which competes with traditional midmarket CRM offerings such as SalesLogix and hosted services such as Salesforce.com. Siebel's chief executive at the time, founder Tom Siebel, confidently predicted the company would blow past Salesforce.com to become number one in the hosted CRM market within a year of entry.

The company has failed to live up to that lofty boast. Siebel refuses to comment on the size of its OnDemand customer base, but an IBM SME marketing executive at yesterday's press conference referred to the product's "hundreds" of customers. Salesforce.com ended October with more than 12,000 customers and 195,000 subscribers.

Cleveland, who also serves as Siebel's OnDemand general manager, said he thought internal obstacles had stopped OnDemand from taking off. "What hurt OnDemand initially was that we needed to get a competitive product," he said. "We went through five releases in a year. These days, when we get in deals, we win."

Cleveland said Siebel also needed a thorough overhaul of how it positioned its SME offerings and how it compensated its sales teams to avoid conflicts. The company is now agnostic about which delivery model SME customers choose - onsite or hosted - and whether they buy direct or through a partner.

Such radical changes wouldn’t have happened at Siebel two years ago, Cleveland acknowledged. He returned to the company in July, soon after Lawrie's appointment as chief executive. Cleveland said Lawrie's management style suited Siebel's needs as it tried to grow into a top-tier, global company.

"The most difficult challenge I've had hasn’t been the technology, but the people," Cleveland said. "Now, we're changing the organisation, and I've got the right people in place."

Stacy Cowley writes for IDG News Service


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