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Lawrie's ouster a sign of competitive challenges

Lawrie's ouster a sign of competitive challenges

Wednesday's ouster of Michael Lawrie as CEO of Siebel Systems Inc. in the wake of a weak first-quarter financial showing is further evidence that the CRM market leader is continuing to struggle with increased competition from rival vendors, some users and analysts said Wednesday morning.

Lawrie was hired last May to replace company founder Thomas Siebel because of his credentials as an IBM executive, which Siebel's board of directors felt would "show investors and customers that stability was the word," said Ian Jacobs, an analyst at Current Analysis Inc. in Sterling, Va.

But Siebel is still losing ground in the CRM market, Jacobs said, adding that the company's sales problems are partly the result of increasingly strong competition from vendors such as Salesforce.com Inc. and SAP AG.

Another issue is Siebel's continuing inability to grasp how to market its software to small and midsize companies, Jacobs noted. For example, the hybrid model that Siebel has pitched for combined installations of its packaged software and its CRM OnDemand hosted applications "sounds great on paper," he said. But the company has been unable to entice users to mix their deployments in that way, according to Jacobs.

After three quarters of continued instability at Siebel, Lawrie was probably "on borrowed time" despite the fact that he had yet to reach the one-year anniversary of his hiring, said Richard Napier, business development manager at InFact Group. The Plano, Texas-based software consulting firm and systems integrator uses Siebel's hosted applications to support its internal operations and does Siebel-related work for its customers.

Lawrie's "approach to business growth was one that I respected, and I'm disappointed that it didn't come to fruition," Napier said. But he noted that George Shaheen, who was named to take over as CEO, is a longtime member of Siebel's board. Napier took his appointment as a sign that the board doesn't view the company's current plight as a complete turnaround situation.

Debra Domeyer, chief technology officer at CarsDirect.com Inc., an online automobile retailer in Sherman Oaks, Calif., that uses Siebel's call center and sales applications, praised the direction that the company had taken under Lawrie. "Siebel has been on the right track with their increased customer focus over the last year, and we hope they continue that emphasis," Domeyer said.

But an IT manager at a financial firm that runs Siebel's software said the vendor's ongoing problems are indicative of a competitive realignment in the CRM market. "With SAP and Salesforce.com eating away at Siebel's market share, the next CEO is going to have to have some dynamic new ideas on how to revive the business," said the IT manager, who asked not to be identified.

He added that he will be watching to see whether the first-quarter shortfall in revenue affects Siebel's technical support and software release schedule. But from his perspective, he said, the management change "is not a scary development."

Ann Livermore, executive vice president of the Technology Solutions Group at Hewlett-Packard Co. -- which ousted Carly Fiorina as its CEO in February and replaced her late last month with former NCR Corp. CEO Mark Hurd -- said at Computerworld's Storage Networking World conference in Phoenix today that boards of directors are looking more closely at corporate performance.

"I'm not close enough to Siebel or to that situation to know exactly what transpired," Livermore said during an interview. "But many boards are taking much more seriously the transparency and predictability of results. No board likes to be surprised."

Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Berkeley, Calif., said he was surprised by the timing of Lawrie's departure but not by Siebel's decision to take drastic action. "Something had to happen," Greenbaum said.

When Lawrie was hired as CEO last year, company founder Thomas Siebel praised him as an executive with a deep understanding of the vendor and a solid strategic plan. A year later, little has changed at Siebel, said Jason Kraft, an analyst at Susquehanna Financial Group in New York.

"Siebel is at a point where they have to either redo their strategy or really execute it," Kraft said. "It's one extreme or the other: status quo or big change."

Don Tennant of Computerworld and Stacy Cowley of the IDG News Service contributed to this story.

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