A second act for Siebel Systems?

Lawrie will carry forward the company?s focus on business application software that helps companies organize their sales, marketing and customer services efforts, he said Monday in the keynote speech at the Siebel User Week 2004 conference. It?s a niche that he said is ripe for growth, despite tepid demand for customer relationship management (CRM) systems that?s hobbled the San Mateo, Calif., company and some of its rivals over the past several years.

"This is exactly the reason I came to Siebel Systems," said the former IBM executive, who took over the top post at Siebel in May. "I believe passionately in this opportunity. What could be more important than linking to and understanding customers in a way heretofore just not possible?"

Lawrie joined Siebel during a difficult time for the company, with the hope of turning the firm around. In the late '90s, former CEO Tom Siebel led the company through a period of rapid growth in which it became one of the biggest software success stories of the high-tech boom. But as businesses grew more skeptical and trimmed their software budgets, Siebel's revenue and stock price fell.

Dark clouds
Rumors began to circulate--and still do--that the company is up for sale. That speculation was fueled by testimony from Oracle chief Larry Ellison during the antitrust trial over his firm's hostile bid for PeopleSoft that Tom Siebel had approached Ellison about buying his company.

But during the keynote--his first public speech since taking the reins at Siebel--Lawrie hinted that Siebel intends to be a buyer, not a buyout target. Specifically, the company is looking to stake out new positions in niche markets, such as software for tracking employee bonuses, commissions and other incentive payments.

"This will drive our thinking around acquisitions," Lawrie said. "We want to fill out our portfolio in these areas."

Lawrie acknowledged, however, that the company faces several big challenges. One of them, ironically, is to improve its own customer satisfaction record. In a recent survey, 41 percent of Siebel customers said efforts to install Siebel's software had not met their expectations.

"We need to be easier to work with," Lawrie said. "We need to be a better partner."

He also acknowledged that increasing the company's revenue and profits would be tough because the company faces increasing competition from SAP, Oracle, Salesforce.com and other rivals. But Lawrie had some good news to bolster him on that front. Siebel announced on Monday that it had exceeded analyst projections for revenue and profits in the quarter that ended on Sept. 30.

In addition, many Siebel customers are completing their Siebel software installations after leaving it on the shelf for a while, Lawrie said. The company has been criticized for selling more software than its customers could handle, creating a "shelf-ware" problem that had sapped demand for its products. Customers have installed 84 percent of 3.2 million software seats they?ve collectively purchased, he said.

"Much of the overhang associated with the last few years is nearly gone," Lawrie said.

Silver linings
Lawrie also talked about what he envisions as Siebel's top opportunities for growth. One is the company's OnDemand initiative, a software rental division that charges monthly fees for access to its programs over the Web. The company entered that market about a year ago and faces competition from Salesforce.com and other contenders that got earlier starts.

Siebel is also focused on helping businesses to customize its software to their specific requirements--a market Lawrie referred to as "custom-built." Custom-built applications represent 75 percent of the corporate software market, dwarfing the market for so-called packaged software, in which Siebel, SAP, Oracle and others specialize, Lawrie said.

Siebel's approach to this is largely a matter of packaging, however. During a press conference following his keynote, Lawrie said he did not intend to compete with computer services firms that traditionally specialize in custom programming, such as IBM, Accenture or Deloitte Consulting.

Instead, Siebel will encourage customers to purchase smaller bits of its multiproduct software package, and it will provide some of the technical tools and know-how to help them build their own programs on top, Lawrie said. Lawrie conceded, however, that the company has already been doing this for some time, and that it isn't an entirely new concept.

That proved true of most topics Siebel executives are discussing here, as the company appears to be paving few real new roads.