Siebel: CRM Faces Toughest Problem Yet

Even as the customer relationship management (CRM) market crests, these solutions are not providing an answer to the biggest problem facing corporations today, an industry luminary says.

Thomas Siebel, chairman and CEO of front-office software giant Siebel Systems Inc. (, says the hypothesis that automated self-service and product ordering via the Internet would cut costs of sales, service and support has proved wrong.

Instead the Internet has empowered consumers to expect businesses to conduct transactions in the manner the consumer chooses, at any time the consumer likes -- including a midnight call from the kitchen. Essentially, businesses are losing control of the choice of the distribution channel for their product.

Siebel’s remarks came during a keynote address at DCI’s CRM and Data Warehouse World show in New York this month. CRM is a hot term for the products that grew out of sales force automation and customer service software. The umbrella of CRM covers everything that helps give sales and service employees as much information about a customer as possible during an interaction with that customer.

The solutions tend to be more consumer-oriented than knowledge management dashboards and business intelligence portals, which are designed to put relevant business information about corporate customers in front of analysts and executives. Most CRM solutions are data intensive, and CRM is increasingly becoming an important application for data warehouses.

According to Siebel, no one knows the right way to integrate existing distribution channels with the Web from a business standpoint.

"The problem here is: The idea of destroying your distribution method is scary. We do not even have a methodology for thinking about this problem," Siebel contends.

Siebel predicts even great businesses that are unwilling to acknowledge the new reality will go belly up.

"If you’re a bank and your means for reaching customers was branch offices open from 10:00 to 3:00, you’re chance of surviving is zero," Siebel says. "We’re no longer saying, ‘You’re going to do business through this channel.’ In the future, we are doing business with a customer anyplace, anywhere."

The thorny business issues involved have escalated the CRM purchasing decision from the sales manager, who made the call in the early 1990s on sales force automation products, beyond the CIO to the board of directors, Siebel says.

Although Siebel says the problem is the primary constraint on CRM, the industry appeared robust at the DCI show. Siebel had the biggest display on a show floor that was bigger than the show floor for its sister show, Data Warehouse World.

CRM software was a $100 million market in 1993, but today it is a $2.2 billion market with a compound annual growth rate of 54 percent, Siebel says. Figures from Lucent Technologies (, size the combined hardware, software and services of the CRM market at $11 billion in 1998, which is projected to grow to $29 billion by 2002.

Companies are addressing the technological challenges CRM poses. One is continuing a dialogue thread with a consumer across different distribution channels. In the case of a car shopper, the history of a customers’ Web interactions with an automaker would be available to a call center agent if the customer calls for more information or to a salesman if the customer walks through the dealership doors.

Lucent introduced a Windows NT-based product suite at the DCI show called CRM Central 2000. The product provides the infrastructure to unify front- and back-office systems, call center applications and other customer interaction systems to provide a complete view of the customer for those who interact with customers. The solution includes a repository for customer information built on SQL Server 7.0.

According to Siebel, technology is not the problem. "Technology used to be the issue. Data synchronization and replication is a difficult problem, but compared to the [business] problems going forward, it’s trivial," he says.

For now, systems integrators such as Pricewaterhouse Coopers L.L.P. bring as many disciplines into a business situation as they can when figuring out how to integrate the Web presence into the sales channel.

"We ask what’s going to be the downside if you do that," says Chris Leibfreid, national director for Pricewaterhouse Coopers’ CRM practice. "You need to take a look at all your sales avenues. You’ve got to make sure that you don’t damage an existing distribution channel."