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Siebel loses round in CRM battle

PeopleSoft earns bragging rights by inking a deal with a former customer of Siebel Systems, the market leader in CRM applications.

PeopleSoft has earned at least temporary bragging rights by inking a deal with a former customer of Siebel Systems, the market leader in CRM applications.

PeopleSoft's new licensing agreement with Landmark Graphics, a subsidiary of oil and gas company Halliburton, follows the parent company's decision to scrap a set of multimillion-dollar CRM (customer relationship management) applications from Siebel, according to PeopleSoft and Halliburton executives.

The Houston-based energy company shut down its Siebel deployment, with licenses for more than 2,000 users, at both its Halliburton Energy Services division and at Landmark late last year as it underwent a corporate reorganization. Halliburton uninstalled the software--some five years after embarking on the project--because of financial troubles and management upheaval related to litigation against Halliburton, according to Siebel executives.

Siebel executives assert that there was no major problem with the software it had supplied to the company.

"This decision was not about Siebel software--it was about a set of unique financial issues at Halliburton," said David Schmaier, an executive vice president at Siebel. "Despite a successful global Siebel deployment, Halliburton's decision to discontinue Siebel, among a number of systems, was a direct result of the project's lack of management sponsorship during a time of massive restructuring and layoffs."

Halliburton representatives declined to comment on the decision, except to confirm that the company is no longer using Siebel's software and has plans to install PeopleSoft CRM applications in its Landmark division. Neither PeopleSoft nor Landmark representatives would disclose the dollar value of the contract.

In the global $3 billion market for CRM software, Siebel is the leader, followed by SAP, Oracle and PeopleSoft, according to market researcher Gartner. The companies tout CRM as a tool to help companies save money and boost customer loyalty, because it streamlines corporate sales, marketing and call center activities. Although CRM software had been a hot growth area in the business applications market in the late 1990s, sales among the leading providers have declined amid the depressed economy. Gartner analysts predict that CRM software sales will remain flat throughout the year. In the meantime, CRM sellers are battling for every available dollar in the market.


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In the absence of the Siebel applications, Halliburton and Landmark have, for now, resorted to the old way of managing sales and customer service activities: using a combination of paper and pen and a hodgepodge of desktop software, according to Halliburton insiders.

Landmark will soon be using PeopleSoft's software, but the Halliburton Energy Services division has yet to replace its Siebel products with another software package. That has left the field wide open for other CRM software makers to swoop in and pick up the pieces.

Halliburton had divided its 2,000 Siebel licenses between Landmark, which develops oil drilling analysis software and employs about 2,000 workers, and the Halliburton Energy Services division, which has more than 34,000 employees. Thus, the bigger prize will be the contract to supply CRM software to the Halliburton Energy Services division.

Sources close to Halliburton speculate that SAP, another Siebel competitor, may vie for the deal, if and when the Halliburton Energy Services division shops for a new vendor. SAP already supplies Halliburton with many of its business systems, including programs that automate the company's production and accounting tasks.

An SAP representative confirmed that the company is in discussions with Halliburton but said it is "premature" to discuss specific details.

Schmaier said the demise of the Halliburton project is a unique case among more than 3,500 Siebel deployments. Furthermore, Halliburton was not among Siebel's largest customers. Some of the biggest Siebel projects, such as those at IBM and Bank of America, support more than 150,000 people, Schmaier said.

What the failed project could do, however, is give fodder to claims by Siebel competitors that they are taking market share from the company. Siebel has recently become a popular target, with rivals claiming to have replaced it as a supplier to companies dissatisfied with its applications.

Siebel also recently came under attack in an analyst report contending that nearly a dozen customers Siebel had showcased as success stories actually reported that the cost of their Siebel projects exceeded the payoff. Meanwhile, numerous surveys and media reports have highlighted the fact that CRM projects, in general, often fall short of expectations.

Siebel has vehemently denied that its customers are among the disillusioned, saying it has a customer satisfaction rate of up to 98 percent. The company even considers its scrapped project at Halliburton a success--one that just happened to become the unlucky casualty of bad business conditions.

However, sources close to the project said the Siebel software had its detractors at Halliburton. Even after extensive training and several years of getting used to the system, many Halliburton salespeople were not using the Siebel applications, said sources both inside and outside Halliburton who were involved in the project and who requested anonymity.

Halliburton also struggled to keep the system up-to-date with new releases from Siebel, the sources said. Halliburton had heavily customized the applications to reflect its unique and complex sales process, rendering the software difficult and expensive to upgrade, the sources said.