Inside Business: Software systems that hit the road
As Siebel proves, technology can be used to increase sales as well as cut costs. Roger Trapp reports
Sunday 28 December 1997
But now that management is thinking about increasing revenue rather than cutting costs as a means of survival, it is looking for information technology solutions that support growth.
This at least is the theory behind Siebel Systems, which claims to be the fastest-growing software company in the world. Although it was founded in 1993 and did not ship its first product until 1995, its latest annual figures show $39m (pounds 24.5m) of sales, an increase of more than 400 per cent on the previous year. Revenue for the third quarter of this year was $32.6m, and markets are predicting that the Nasdaq-quoted company will top $100m for the full year.
The company, which employs 400 people around the world, can see no sign of the bubble bursting just yet. It points to a report by analysts at Forrester Research indicating that the "customer applications market", of which Siebel is a part, will grow by the turn of the century to $3.5bn, or far bigger than the more traditional applications, such as manufacturing, financial and human resources.
Phill Robinson, European marketing director, explains the success as the result of a focus on companies' front offices to match the attention given to their back offices by the likes of SAP and PeopleSoft, which respectively concentrate on financial and human resources.
Previous efforts in this area had centred on automation, but - says Mr Robinson - came to nought because the roles performed by sales and marketing people and indeed all those in what are termed "customer-facing" positions cannot effectively be automated.
But this does not mean that information technology has no role. "We talk about sales force effectiveness, about supporting sales people," Mr Robinson says. What this means is supplying members of sales teams - typically in international companies that have thousands of employees in the field - with the information that enables them to do their job better.
"If I was a mobile salesman, the application would download on to my laptop information about prospects, competition and the like," he explains.
Moreover, he points out, more sophisticated companies can link this information with that serving the service department, for example, so that a customer problem will be logged when received and the information known to the sales person when they next call on the customer.
The approach is also applicable to banks that have for many years mystified their customers when unable to call up the simplest details about them, such as their current account balance, unless they call into their home branch. With consolidation in the sector carrying on at a dizzying pace, Siebel is doing a lot of business with the financial sector as well as with industries that are heavy in sales people, such as pharmaceuticals, telecommunications and other utilities.
But, as Mr Robinson accepts, these sorts of uses have only become feasible through the sharp reductions, in recent years, in the costs of computer hardware and software. Until recently, just the cost of equipping each member of a 10,000-strong sales force with a laptop computer would have been prohibitive.
The idea came to the company's founder, Tom Siebel, when he was working for Oracle, the software company based close by Siebel's headquarters in California's Silicon Valley. Having been in at the beginning of Oracle, Mr Siebel subsequently became vice-president responsible for sales and marketing before setting up the company's telesales operation. He looked around for a support system for this activity and, finding none, wrote his own. As is frequently the way in Silicon Valley, Mr Siebel then went out on his own. He built up a successful company that he sold to another Valley player and used the money to start Siebel Systems.
Not being beholden to venture capitalists has allowed Mr Siebel and his colleagues, in Mr Robinson's words, to "plough their own furrow" and so follow their conviction that multinationals needed a means of supporting their sales and marketing people in an increasingly competitive business environment.
With globalisation in full flow, it is particularly necessary for large organisations to be able to integrate their sales and marketing efforts around the world so that rival sales people based in different countries do not find themselves unwittingly competing against each other for one company's business.
But they have also backed their vision and the quality of their technology by forming partnerships with hardware suppliers, such as Compaq and Digital Equipment, and, more importantly, consultancies such as Price Waterhouse and Andersen Consulting. The latter has a stake in the business and its managing partner, George Shaheen, serves on Siebel's board.
Such organisations, with their hundreds of staff, have substantially aided Siebel's growth by implementing its systems, so saving Siebel from having to devote its resources to that sort of activity, as Mr Robinson acknowledges.
Siebel stresses that, while certain IT applications require processes to be re-engineered to fit them, most of its applications work through being adaptable to different situations. Mr Robinson points out that if companies change their ways of dealing with their customers for the sake of becoming more effective they could end up having the opposite effect through threatening their competitive advantage.
But this approach is also beneficial for Siebel itself. Because the way in which the software is used depends on the individual company's application, it can be sold to competitors within the same industries - so boosting Siebel's revenues.
As founder of a company that is growing fast even by the standards of Silicon Valley, Mr Siebel obviously feels he has a thing or two to teach companies aspiring to increase sales. In Virtual Selling (The Free Press), the book he wrote with journalist Michael Malone, he draws an analogy between sales people and the cowboys of the Wild West.
"Sales is the untamed frontier of the business world: unpredictable, passionate, theatrical, full of eccentric characters, and dangerous to the newcomer. Like the frontier, the destiny of sales is to be explored, settled, and tamed by people using the right tools and technology. But many also will perish on this frontier, because they are unprepared, unnecessarily exposed to the elements, and annihilated by quick-footed and aggressive foes."
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