Can Siebel Stop Its Slide Essay -- Recession, Case Study, solution

In the fall of 2001, business software pioneer Thomas M. Siebel was giddy as he looked ahead. Sure, the recession was hurting. But he claimed his company, Siebel Systems Inc. -- the leader in software for managing sales forces and customer-service departments -- would be more resilient than its competitors. ``Everybody is going to be naked,'' Siebel said with relish. ``We're going to find out who are the dilettantes. We're going to find out who are the scumbags, and who are the sleazeballs. Everybody is going to be exposed for who they are. It's going to be a remarkable time.'' Two months later, he confidently predicted that the high-tech downturn was about to end. He could be certain, he said, because of the forecasting capabilities in his own software. Well, both Tom Siebel and his software get failing grades for prognostication. The tech industry is still mired in slow growth, and Siebel Systems, software's highest flier in the go-go '90s, has tumbled farther than its ``dilettante '' rivals. Revenues last year tumbled 22%, to $1.6 billion, compared with a drop of only 2% for the overall corporate-applications-software industry. In the first quarter, Siebel's revenues dropped 30%, to $333 million. Siebel's stock price, at $8.50, is off a staggering 94% from its peak in 2000 of $119. It wasn't just the economy that hobbled Siebel Systems. A 2001 product upgrade was so difficult to install that customers were reluctant to buy it. The company's reputation suffered from bad publicity about its customer-satisfaction record. And it lost ground to corporate-applications leader SAP. In 2002, Siebel Systems' share of the customer-management market it helped pioneer slipped from 29% to 23%, according to Gartner Dataquest. No. 2 SAP gained ... ...ness-software maker Siebel Systems has seen revenues slide 44% over the past two years. Here's a look at why, and at its prospects going forward. COMPLEXITY INCOMPATIBILITY PROBLEM Customers complain Its applications don't work Siebel's software is easily with rival software complex and hard to that handles financials and install. Major projects human resources. can take a year to com- plete. FIX A team of 60 consultants New integration technologies helps customers plan improve things, but rivals that projects, but something make full suites of products must still be done to have an advantage. simplify the products. TARNISHED REPUTATION PROBLEM It has been accused of overstating customer satisfaction and was slammed by the SEC for a financial disclosure violation. FIX It hasn't adequately addressed customer satisfaction issues and is stingy with financial information.