The State of Siebel in the 2013 Market - Rimini...

Produced exclusively for Constellation Research clients

Report: Market Overview

Different Strategies for Moving Ahead with Siebel

Implementations and Methods to Assess Career

Risk

The State of Siebel in the

2013 Market

By J. Bruce Daley

Vice President and Principal Analyst

Content Editor: R “Ray” Wang

Copy Editor: Maria Shao

September 20, 2013

© 2013 Constellation Research, Inc. All rights reserved. 2

Table of Contents

Purpose and Intent .................................................................................................. 4

Executive Summary ................................................................................................. 4

State of Siebel in the 2013 Market ............................................................................. 5

Signs of Robustness .............................................................................................. 5

Signs of Age ......................................................................................................... 6

The Constellation Point of View ............................................................................... 7

Why Siebel Is Misperceived by the Market .................................................................. 7

Misunderstanding of the Nature of Enterprise Software .............................................. 8

Mixed Messages from Oracle to the Market .............................................................. 9

Internal Alignment of Oracle’s Organizational Structure ........................................... 10

Where Else Is Confusion in Market Coming From? ...................................................... 11

Short-Term Investors .......................................................................................... 11

Competitors ....................................................................................................... 13

Salesforce ................................................................................................................... 13

Microsoft ..................................................................................................................... 14

IBM ............................................................................................................................ 15

Recommendations: Adopt One of Six Strategies ........................................................ 15

Move Forward .................................................................................................... 15

Move Away ........................................................................................................ 16

Convert to the Cloud .................................................................................................... 16

Convert to On-Premise ................................................................................................. 16

Restart .............................................................................................................. 17

Innovate Around the Edges .................................................................................. 17

Stand Pat........................................................................................................... 17

Abandon ............................................................................................................ 17

Use Our Survey to Assess Where Your Siebel Implementation Stands .......................... 18

Evaluating Career Risk Given the Market for Siebel .................................................... 19

The Constellation Point of View ............................................................................. 19

Disclosures ........................................................................................................... 19

Endnotes .............................................................................................................. 20


Analyst Bio: J. Bruce Daley ..................................................................................... 21

About Constellation Research .................................................................................. 23

Organizational Highlights ..................................................................................... 23


Purpose and Intent

Oracle Siebel is a mature application showing signs of both robustness and age. With Oracle

sending mixed messages about the product’s future, this report helps current customers determine where they stand with Siebel and the different directions in which they can take

their implementation. The report also includes a section with career advice for people with Siebel skills. The intent of this paper is to provide readers with both objective and subjective methods of evaluating the information they receive so they can make the right decision for

their business and influence the direction of their careers.

This report offers insights into four of Constellation’s primary business research themes, the

Next-Generation Customer Experience, Technology Optimization and Innovation, Digital Marketing Transformation and the Future of Work.

Executive Summary

At a philosophical level, all software is an attempt to capture the real world. This is especially true of enterprise software, which models the transactions and interactions of corporations

and other large organizations.

Development on Siebel software first began 20 years ago. Since that time, the world changed in ways the original developers could never have envisioned. In 1993, there were

only 500 Web pages and no smartphones. In 2013, there are 4.09 billion pages and 1.4 billion smartphones. Although Siebel technology shows many signs of robustness, it is also

showing some signs of age. Does that mean organizations will be forced to abandon the tens or even hundreds of millions of dollars they have invested in Siebel over the years? Many people in the market would have you believe that, yes, this investment must be

abandoned, but the honest answer is it depends.

It depends on the success of the application. It depends on how quickly the supported

business is changing. And it depends on other factors outlined in this report. Once you determine where your implementation stands, the best strategy to follow going forward naturally emerges. At a high level, these strategies can be described as:

Move Forward

Move Away

Restart

Innovate Around the Edges

Stand Pat

Abandon

Since enterprise software is an attempt to model the real world and the world is always

changing, adapting software to reflect it is a never-ending task. Therefore, your strategy must be reviewed periodically to ensure it is still valid.


State of Siebel in the 2013 Market

In 2013, Siebel is a seasoned Customer Relationship Management (CRM) application

showing both signs of robustness and age. Development of Siebel technology began 20 years ago in San Mateo, California. Some of the most significant changes that have taken

place in the IT environment, including the cloud, the massive proliferation of smartphones and the triumph of TCP/IP over other standards, were not envisioned in the original design. At the same time, the fundamental architecture was well thought out and the code well-

executed. The product today demonstrates many of the advantages of maturity, including stability, predictability and resilience as well as some of its disadvantages, which are

inflexibility, historical baggage and old-fangledness.

Signs of Robustness

Despite the years, Siebel applications remain one of the most successful enterprise packages ever built. Constellation estimates that from inception, the product has been sold

to about 8,000 organizations worldwide. Attrition of both the application and the clients themselves has reduced that figure to about 5,000 organizations using Siebel in one way or another currently. This number does not include another 5,000 or so organizations using

CRM On-Demand, the software-as-a-service (SaaS) version of Siebel. About 40 percent of the installed base is found in the Americas, 40 percent in Europe, the Middle East and Africa

(EMEA) and 20 percent in Asia Pacific.

Of the 5,000 existing on-premise customers, Oracle estimates that 88 percent have implemented, are implementing or plan to implement version 8.x of Siebel. Of that number,

about 1,000 are very large organizations that are continuing to enhance, integrate and customize the application in addition to keeping current on the latest version. These

organizations constitute the core of the installed base and are the customers mostly likely to remain in business for a long time and continue to use Siebel.

New versions have come out every year since Oracle acquired Siebel in 2006. Two releases,

a maintenance release in the spring and an enhancement release in the fall, were planned for 2013. Two versions of the April maintenance release -- Siebel 8.2.2.2 for the public

sector and 8.1.1.10 for everyone else -- have split the code base temporarily. The last enhancement release in fall 2012 included some significant new functionality, including the Siebel Open User Interface (UI), which changes the top layer of the three-tiered architecture

and allows the application to run on more devices and browsers and for the look and feel of the application to be customized. The new Open UI product has the potential to extend the

useful life of many Siebel implementations and also improve new sales. Not only does the new interface open up new form factors (e.g. iPads, iPhones, Android, etc.), it also creates

the possibility of completely changing the user experience, which had been one of the big complaints about Siebel from recent customers.

Over the years, Oracle has added specific functionality for many industries, including

pharmaceuticals, finance, telecommunications, insurance, utilities and the public sector.

Oracle Siebel has a strong analytics tool, Oracle Business Intelligence Enterprise

Edition (OBIEE), integrated into the product.


Many different levels and flavors of support are available both from Oracle and from third parties. Under its Applications Unlimited strategy, Oracle plans to provide ongoing

enhancements and support to all of its application product lines beyond the delivery of Oracle Fusion Applications. Support is also available from third parties like Rimini Street and

Eagle Creek Services. Companies such as Spinnaker Solutions are also entering the market to provide third-party support, which is another sign of the application’s robustness.

Training for Siebel applications continues to be offered both by Oracle as well as by third

parties such as Quilogy Services from Aspect.

Third-party products from vendors such as Buzzient, invisibleCRM, Customer Systems,

earthIntegrate, KNOA and Selectica are integrated or being integrated both into the most current version of Siebel as well as older versions.

Many of the world’s largest consulting companies have very active Siebel practices,

including Accenture, Deloitte, Cap Gemini, Tata Consultancy Services, HCL and Wipro.

Constellation estimates the total value of the business done by the ecosystem surrounding

Oracle Siebel to be $8 billion a year worldwide.

As measured by the number of job postings and the number of recruiters actively searching for full-time employees and contractors, demand for people with Siebel skills is increasing.

New customers continue to buy new versions of Siebel. Many of these new customers are headquartered outside of North America and are in industries where Siebel already has a

well-established installed base such as retail banking.

As a company, Oracle remains well-run and is financially stable. Oracle is profitable, has

$43 billion in short term assets and is improving its balance sheet quarter by quarter.

Signs of Age

While Siebel shows many signs of robustness, it also demonstrates some signs of age. Despite adding new customers, the installed base is shrinking as some companies using

Siebel are acquired or go out of business. With the average life span of a company in the Standard & Poor’s Index now averaging only 15 years, some attrition in the installed base is going to take place regardless of how well or how poorly the Siebel application is running.

Some Siebel customers, without changing corporate structure, are also moving away from the application toward other applications based in the cloud.

Not all customers are keeping current with the latest version. In some cases, their applications are too highly customized to make upgrading a cost-effective exercise. This is particularly the case where the underlying business process is relatively stable, such as in

banking or telecommunications, or is responsible for a very large amount of revenue.

Other customers have found Oracle support too costly and have turned to third parties like

Rimini Street. By the same token, demand for training is tapering off. Some classes have been cancelled due to lack of interest, and sometimes training is provided to classes with


only a few students. More qualified people are leaving the Siebel employment market for other opportunities than new people are entering it.

Industries new to CRM, such as health care and education, are opting for other products than traditional on-premise Siebel, although some of them are adopting CRM On-Demand,

which is the hosted version of Siebel (although at this point the code lines split many years ago).

For 2013, Oracle reported gross revenues that were basically flat from 2012, increasing

investor pressure on the company to make changes in the way it does business. The company has responded in various ways, including increasing the size of the direct sales

force. But some investors question the Applications Unlimited strategy, Oracle’s plan for continuing to upgrade existing applications, and would like to see it changed to force customers to buy Oracle Fusion applications.

If the installed base continues to decline because of corporate attrition, conversion to the cloud and a shrinking pool of qualified Siebel talent, at some point in the future, some of

the services that current Siebel implementations depend on, such as upgrades and training, may not be provided or will be priced at a premium.

The Constellation Point of View

Constellation believes that since Siebel is deeply entrenched in some very large

organizations, it will be many decades before the market for support and aftermarket products disappears. From the perspective of the market, there is no reason to consider replacing Siebel with another package because of lack of services or the risk these services

will not be available in the foreseeable future.

Why Siebel Is Misperceived by the Market

Oracle's internal plans to move forward with the Siebel code line have never really been in question, although some outsiders have questioned the scale and scope of these plans. What has caused the confusion in the market about the future of Oracle Siebel is a general

misunderstanding of the nature of enterprise software, a view propagated by short-term investors and competitors. The misunderstanding also reflects the mixed messages Oracle

itself sends the market about the future of Siebel.


Figure 1. The Plan

Source: Oracle

From now until at least 2028, Oracle has made plans to offer a fix pack (FP in Figure 1) in the first half of each year. This upgrade fixes bugs and includes any code changes needed

to work with newer versions of Oracle and third party software (also called certification). In the second half of each year, Oracle plans an innovation pack (IP in Figure 1) with new

enhancements.

Oracle's current policy is to provide customers with three different levels of support for their Siebel application. The first level, Premier Support, provides five years of maintenance and

software upgrades from a release's general availability date. The second level, Extended Support, offers less support but for a longer period. The third, Sustaining Support, can be

continued indefinitely but with even less support.

That seems straightforward enough, so what is causing the confusion in the market?

Misunderstanding of the Nature of Enterprise Software

In a business where fortunes are made in the name of innovation, it’s tempting to believe

enterprise applications can be changed as easily as a shirt or a pair of pants. Since enterprise software takes a long time to develop, a long time to adopt and a long time to

replace, successfully implemented Siebel applications will prove surprisingly sticky unless they are caught in a Daley Conversion Triangle. The triangle describes the interaction between three factors -- the tenure of the business executive, changes in the way business

is done and changes in technology -– that must be present in addition to business fit, system stability and cost for an application to be converted. (See Constellation research report,


Seeing the Good, the Bad and the Ugly in Legacy Applications, for more details on the triangle1).

As an analogy, even replacing every single item of clothing in a household’s entire wardrobe falls short of capturing the amount of effort involved in moving away from Siebel for most

organizations. Changing an enterprise app is closer to tearing out all closets in a house and replacing them with new closets than it is to changing outfits. It is a monumental undertaking.

Because of the difficulty, in most IT environments, new layers of technology are added on top of existing layers rather than replacing existing layers. Although IBM mainframes were

declared obsolete many decades ago by some, IBM sold more of them in 2012 than it did in 1980. Year after year, companies that standardized on mainframes have found it more cost effective to continue to run them rather than convert them to other systems. Although

the cloud has affected new sales of on-premise software, it does not mean that organizations are ready to convert seasoned applications to the cloud unless they have a

very good reason for doing so, such as a dramatic increase in the energy cost of running a data center.

Despite what vendors claim, most conversions away from Siebel to other applications, even

cloud-based products, will take between two to four years to complete and some will take even longer. Conversions away from Siebel occur every year and often for a good reason,

but no conversion can be undertaken without incurring some risk, especially career risk.

Mixed Messages from Oracle to the Market

The confusion in the marketplace is not helped by the fact that Oracle itself is sending mixed messages about the future of Siebel. On the one hand, Oracle’s commitment to the

Applications Unlimited strategy has been clear and, on the other hand, Oracle itself has launched a competing product that it would like to see all its applications customers

(eventually) convert to. Executive management at Oracle believes that the company’s long-term success depends upon both its ability to develop new products as well as enhance existing ones. They also feel Oracle needs an integrated product to compete with SAP in

those new opportunities that arise.

Hence, Oracle approved Project Fusion in late 2005. As a vision, Fusion remains one of the

most compelling enterprise software product families ever conceived. With over 100 enterprise applications available either on-premise or in the cloud, with a service-oriented architecture, a user interface that can run on hundreds of devices sitting on a common

middleware and written entirely in Java, Fusion is a very attractive proposition. The problem, of course, is time to market. Although some estimates are that as many as 5,000

programmers are working to deliver on one aspect of Fusion or another, it has proven impossible to deliver such a complex, ambitious technology within even a few years’ time, much less roll out all the applications at the same time.

Out of organizational necessity, the release of Fusion components has been staged over the past seven years, with some of the middleware appearing in 2006 and some of the apps

only making a debut this year. Unfortunately for Oracle, during this time, the industry has


seen a major re-platforming from client-server to cloud/smart phone. So in 2013, while many Fusion modules, especially the Fusion middleware, are stable, tested and proven,

other Fusion modules are not at the same level of maturity and are not ready to replace seasoned applications in large production environments.

In addition to a new platform, paradoxically, the longer it has taken to roll out individual modules, the harder it has become to complete the Fusion vision. Since all software fundamentally is an attempt to model the real world and the real world is always changing,

enterprise software must change accordingly. In the eight years since Fusion was first announced, there also have been some significant modifications in the way business gets

does, most particularly in the field of marketing. Innovations such as social networking and e-commerce have changed the way many products are bought and sold and increased the amount of development some of the Fusion application modules have needed to achieve an

acceptable level of functionality.

So Oracle executives are caught in the position of having to tell investors that the money

already spent on Fusion has not gone to waste, to tell their applications installed base that they should not convert to anything else now (although they will need to convert in the future) and to tell new customers that Oracle has a product competitive with SAP that they

should buy today.

Although not all of the 100 or so Fusion components are at the same level of maturity,

Oracle executives tend to speak about Fusion with a big “F”, as if it were one product with a consistent level of stability -- which the market finds confusing when evaluating individual

modules. While Oracle has remained faithful to the Applications Unlimited strategy, Larry Ellison himself has been publicly critical of the architecture Siebel is based upon. This has caused customers and prospects to question Oracle’s long and even short-term commitment

to Siebel. Oracle’s recent cloud partnerships with Salesforce.com, Microsoft and NetSuite seem to confirm this fear.

When third parties like Forrester Research or someone in the investor community weighs in that Oracle should abandon support for existing applications to spur sales of Fusion, can it be any wonder so many Siebel customers are not sure about Oracle’s future plans for the

Siebel application many have come to depend on? They actually have less need to worry than they may fear about being forced to abandon Siebel. A better understanding of how

Oracle operates shows why.

Internal Alignment of Oracle’s Organizational Structure

A direct report of Larry Ellison's put it best when he said, “Oracle is a collection of tribes working under a single flag.” What he meant is that different groups within Oracle operate

independently of each other and often at cross purposes. Over the years, the pragmatic, flexible and ruthless culture developed under Ellison’s leadership has helped Oracle emerge the winner over most of its rivals, including Siebel Systems, which was run in a very different

manner.

More than in most business cultures, Oracle holds executives accountable for results. The

ethos is straightforward. If you make your numbers, you get to keep your job. If you don't,


you get fired. This proves very empowering for those individuals inclined toward taking initiative and assuming risk. One of the strengths of Oracle is that decisions get pushed

down to the level in the organization where they can be made best. This is one of the reasons why Oracle has been so successful in acquiring other companies -- the people who

know the business best tend to run them. The downside is that two different groups may have goals or methods that conflict and their sometimes bitter fight can spill into the market.

So while one group may be working diligently to enhance and expand a seasoned

application, another may be working equally hard to develop a product to replace it or to support a direct competitor. The important thing to understand is that at the end of the

day, in Oracle culture, revenue trumps everything else. The revenues from Siebel upgrades and support represent hundreds of millions of dollars a year of highly profitable revenue for Oracle. So successful is this business that Siebel Systems is considered within Oracle the

best of all the 80 or so acquisitions it has made to date.

Oracle does not own the individual implementations of Siebel and cannot force customers

to keep current with new releases. Every year since Fusion was first released, customers have voted with dollars, euros and yen for new Siebel releases over Fusion CRM and Oracle Sales Cloud releases. Until Fusion CRM revenues at least somewhat approach the level of

Siebel revenues, there is little reason to fear Oracle will favor the former by abandoning the latter, no matter what may be said in public.

Where Else Is Confusion in Market Coming From?

Oracle is not the only party muddying the waters when it comes to the future of Siebel. Some investors and competitors are as well.

Short-Term Investors

Although most of Oracle is owned by either institutions or officers of the company, a small but vocal percentage of shareholders wants the company to make big changes in its approach to the applications business.

According to filings with the Securities and Exchange Commission (SEC), institutional investors (mutual funds, pension funds and hedge funds) own about 62 percent of Oracle

and insiders control another 24 percent. That leaves only 14 percent of the shares owned by individual investors (or organizations that don’t need to file with the SEC). (See Figure 2) Although institutional investors and insiders do buy and sell shares of Oracle regularly,

because their positions are so large, their trades are closely watched and their reporting requirements are heavy, so they tend to hang on to shares for the long term.

This is not so much the case with the remaining 14 percent, who trade, as a rule, much more frequently. Although this is a generalization and some of the 14 percent do own Oracle

for the long run and some of the 86 percent (hedge funds in particular) do actively trade, this category serves as a good proxy for those investors who buy Oracle shares for the short term – less than a year and in some cases less than a day.


Figure 2. Who Owns Oracle?

Source: SEC Filings

According to Nasdaq statistics, when Oracle stock is heavily traded, such as on the biggest volume day of 2013, an amount equal to 24 percent of short-term investor shares might

change hands in a single session. (See Figure 3) The ultimate goal of these investors is not aligned so much with the best interests of Oracle customers or even necessarily Oracle itself

but to influence other investors and make a quick buck.

This group accounts for much of the volatility in the price of the stock and also contributes a voice in the market commanding Oracle to abandon the Applications Unlimited strategy.

Dissident investors who want to stir the pot have only a few sticks to beat management with and one of them is Fusion. Some of the statements Larry Ellison and other officers of

Oracle make on the topic may not so much be directed toward customers or prospects as they are toward short-term investors who want to cash out their position and buy something

else.

This short-term view on the part of some investors is unfortunate in a business that requires a large commitment of capital to develop software and hardware products and may require

many years to see a return on investment. It is unfortunate because it confuses customers. Oracle management may even just be paying short-term investors lip service while taking

action to increase the dividend, buy back shares, improve the balance sheet, invest in research and development and move to the New York Stock Exchange, which are all more appealing to long-term investors.

Boeing’s investors don’t pressure it to abandon making parts for the 737 so its customers will buy more 787 Dreamliners. They know better. Like Boeing’s customers, Oracle’s on-

premise customers don’t have to buy new technology until they have reason to do so, which is a point investment newsletters and financial Web sites don’t always consider when they advocate abandoning the Applications Unlimited strategy.


Figure 3. Private Investors Compared with Highest Volume Day

Source: Nasdaq

Competitors

Salesforce

Although Larry Ellison himself was one of the early investors in Salesforce.com, the

company has proven Oracle Siebel’s most adept opponent in the marketplace. As good as Salesforce.com is at building and managing solutions, the company is even better at

marketing them. Oracle’s budget for Siebel marketing is not even a fraction as large as Salesforce.com’s, which means the market tends to hear only one side of the story. In addition, Salesforce.com has proven aggressive and inventive at getting its word out. For

example, in 2003, Salesforce.com hired protesters to picket Siebel User Week in San Diego. Last year, the company speedily arranged an alternative event to Oracle Open World after

Salesforce.com chief Marc Benioff’s keynote speech was cancelled at the Oracle event. The company has shown admirable ability to get its message across no matter what the challenges.

Siebel has always been in Salesforce.com’s competitive sights and many of the people who work at the cloud services company also once worked at Siebel or Oracle and understand

Oracle/Siebel well. Salesforce.com has been able to convince much of the market that it is the best approach to any CRM problem, even though this is not always the case. Although Salesforce.com is a good solution for many customers, there are still situations where on-

premise is a better fit, which is why Oracle continues to make new sales of Oracle Siebel every year.

To make matters only more confusing, Oracle recently announced a long-term partnership with Salesforce.com. Only a few months before, the announcement rumors circulated that Salesforce.com would abandon the Oracle database in favor of an open source solution,

possibly PostgreSQL. Since the rest of Salesforce.com's solution was built on open source,


and the company has had problems with Oracle databases in the past, these rumors that Salesforce was thinking of converting away from Oracle seemed credible.

Thanks to the new partnership, over the next nine years, Salesforce.com will standardize on the Oracle Linux operating system, Exadata hardware and Java middleware platform as

well as retain the Oracle database. Oracle will integrate Salesforce.com with Oracle’s Fusion HCM and the Financial Cloud. Acquired groups within Oracle already using Salesforce.com will be able to keep using it instead of the Oracle Sales Cloud. Salesforce.com will also

implement Oracle’s Fusion HCM and Financial Cloud applications internally.

This partnership has caused the market considerable confusion about the future of Oracle

Siebel. Some pundits have wondered if Oracle will now favor Salesforce.com as an application over Siebel. This is a little like asking if one chip on the roulette table will be favored over all the other chips. Some groups within Oracle will continue to compete as

hard as ever before against Salesforce.com even while other parts of Oracle will be working equally hard to support it. At the end of the day, all this is good news for the Siebel installed

base, since it will eventually make the task of integrating with or converting to Salesforce.com much easier.

Microsoft

When Oracle announced a partnership with Salesforce.com, it also announced a partnership with Microsoft around the Azure cloud product. This partnership is a classic example of

coopetition, a neologism coined to describe a business relationship that is sometimes cooperative and sometimes competitive.

Interestingly enough, Microsoft used to be a flagship Siebel customer and had one of the largest Siebel implementations in the world. Microsoft’s Siebel implementation supported 30,000 end users and was heavily customized and integrated with more 170 other

applications. Six years after Oracle acquired Siebel Systems, Microsoft was able announce in May 2012 that it had successfully converted its implementation to its own product,

Microsoft Dynamics CRM.

As part of their new agreement, Oracle software will be modified, tested and certified to run on Windows Server Hyper-V (virtualization being a prerequisite for the cloud) and more

specifically on the Windows Azure cloud. Customers will then be able to deploy Oracle software — including Java, Oracle database and Oracle WebLogic Server — on Microsoft

clouds and receive full support from Oracle.

Microsoft will also offer Oracle products to Windows Azure customers and make Oracle Linux

available as an option. This is in the interest of both companies since it expands their respective markets and was something some joint customers clamored for. No mention of Dynamics CRM, Microsoft’s competitive offering to Siebel, was made in the announcement.

The partnership between Microsoft and Siebel is good for existing Siebel customers because it opens the door to the possibility of running Siebel instances on the Azure cloud, which

may be appealing to some customers for both stability and cost reasons.


IBM

IBM used to enjoy the distinction of running the largest Siebel implementation in the world. When Oracle bought Siebel Systems, this situation became unpalatable to IBM, as it did to Microsoft. Plans soon were made to convert the Siebel application to Sugar CRM. The

important thing to note here is that in 2013, seven years after the fact, IBM is still moving Siebel users over to Sugar CRM, which demonstrates that conversion is no easy task for

even the largest and most technically savvy of companies.

Recommendations: Adopt One of Six Strategies

No matter what the strategy, the goals for every seasoned implementation are basically the same:

• Improve the application’s fit for the business. This means how well it supports the day-to-day business in terms of providing the information needed to complete

transactions and other business activities.

• Improve the application’s stability. This includes how often it crashes or has poor performance.

• Reduce how much it costs to maintain. Operating expenses for seasoned applications typically consume the bulk of most organization’s IT budgets.

Sometimes, these goals may come into conflict and will have to be managed. After assessing where your Siebel implementation stands, consider adopting one of the following six strategies:

Move Forward

The go-ahead-with-Siebel strategy is best for sites with a stable, underlying business process; a healthy amount of profitable revenue accredited to the business; a large number

of users; and a large number of customers. It will be a better strategy in industries, such as pharmaceuticals, finance, telecommunications, insurance, utilities and public sector, where Siebel has industry-specific functionality. Sites should also evaluate the Oracle

product roadmap carefully to determine if it is better to Move Forward or Innovate Around the Edges. The strategy works better if the implementation has a healthy number of

integration points and power users. As with any application, the closer the implementation is to being completely vanilla, the easier it will be to adopt the Move Forward strategy. The more Oracle products being run in the data center and the closer the organization is to

being completely run on the “red stack”, the better.

Adopting a Move Forward strategy with Siebel involves keeping current with the latest

upgrades, customizing only when strictly necessary and integrating with existing applications. Oracle has made a number of enhancements in recent releases to make the process of upgrading easier, including Information Rights Management and real-time

configuration. Such sites should consider implementing programs to train junior staff in


Siebel and to make stronger efforts to advocate with Oracle for the specific changes and enhancements their implementations most need.

This strategy emphasizes improving the fit for the business, primarily at the expense of cost, although Move Forward is still much less costly than Moving Away.

Move Away

Convert to the Cloud

Sites where the underlying business process has changed significantly since Siebel was first implemented, where the primary business sponsor is new in tenure (and has used another

application successfully at the previous employer), that do not have a lot of users, are stable and generate a significant amount of profitable revenue are good candidates to convert to

the cloud. The existing implementation can be moved to a private cloud that is hosted by Oracle or to Oracle Business Process Services (BPS) which Oracle partners provide.

Existing clients can also elect to convert to either the Oracle Sales Cloud or a third-party

cloud vendor such as Salesforce.com, SugarCRM, Microsoft or SAP, along with a host of up-and-coming CRM vendors following Salesforce.com in the market.

If the application has been highly integrated, highly customized, or both, converting to the cloud is going to be more difficult than if the implementation is pure and vanilla. The underlying business must be significant to the organization in order to justify the expense

of conversion.

This is most likely to be the most costly strategy and the one with both the most career

opportunity and career risk. Once the conversion is completed, system stability is most likely to increase, although this will now be dependent on the vendor.

Existing customers can elect to either turn off the on-premise implementation after

conversion or convert the application and continue to run in parallel, using a lesser version of Oracle support or third-party support. Although this is largely a question of expense,

keep in mind that moving a Siebel implementation takes between two and four years and that the implementation will have to be run in parallel during that time. Many companies in this transition will elect to continue to run the version they have in production and use

third-party support until it is finished.

Convert to On-Premise

Converting to an on-premise version of either Oracle Fusion or another vendor such as SAP or Microsoft is also an option. For some organizations in the financial industry or public

sector, where legal compliance is a concern, converting on-premise applications may be the only option. If the underlying business process is not very stable, Siebel is not a standard in your industry and your data center is primarily run on open source, Microsoft or other

stacks adopting a convert-to-on-premise strategy may the most viable. Once again, this should be seen primarily as a strategy for improving business fit.


Restart

Although often painful, one option that should be examined is reimplementation if the application is not a good business fit but the process is relatively stable and especially if

Siebel is a standard in the industry. One clear sign of this is a lack of power users. If stability is a problem, then converting from an on-premise version to hosting it in the cloud may be beneficial. This is a strategy for improving business fit while also managing cost,

since reimplementation is almost always going to be less expensive than converting. Once the restart is completed, a new strategy such as Move Forward, Innovate Around the Edges

or Stand Pat needs to be followed.

Innovate Around the Edges

A strategy more and more organizations are adopting to extend the life of their Siebel implementation is to Innovate Around the Edges. Instead of waiting for Oracle to offer new

functionality in its annual upgrade release or converting to another application, they integrate third-party products into their existing implementation.

Some of the areas in which they are innovating include mobile apps, social media, analytics,

printed content management and Big Data. This is an especially attractive option for stable, highly customized, high revenue sites with a large number of users and customers that are

not keeping current with Oracle upgrades. This strategy improves business fit and can help manage costs. As a strategy, Innovate Around the Edges can be used to complement the Move Forward, Move Away or Stand Pat strategies.

Stand Pat

Some customers are opting to wait until the market becomes clearer or their organization’s fortunes improve to adopt another strategy. Given the current market conditions, this is a perfectly valid strategy. These customers tend to have implementations that do not support

a large and profitable revenue stream or have a lot of power users or a new executive sponsor. They may be relatively unsuccessful implementations where there are not many

outside factors driving change. These Siebel customers are tending to stay on their current version and not upgrade. Keeping an eye on data accuracy would be a good idea when

following this strategy, even if you decide not to make other changes. They may also choose to manage costs by hosting in the cloud and turning to third-party support. In the long term, this strategy may compromise business fit but may be the best option in the short

term.

Abandon

Although unusual, a few Siebel customers such as Enron, Arthur Andersen and Value America, have simply turned off their system as a result of a significant change in the

business, usually straight liquidation bankruptcy.


Use Our Survey to Assess Where Your Siebel Implementation Stands

Building on the concepts discussed in this research paper, Constellation has designed a confidential survey to provide Siebel customers with objective, measurable criteria to

evaluate the best strategy. The survey asks 36 objective, quantifiable questions about topics such as how many customer records your Siebel implementation has, what version

of Siebel you are running, how accurate is you data, what year did your implementation go into production. Comparing your site with other Siebel implementations should provide the most precise determination of where you stand today and where you need to go in the

future.

Survey participants will not be identified in any way to those outside of Constellation without

their specific permission. To maintain confidentiality, we are following industry best practices to ensure that publicly available survey data do not contain information that might identify survey respondents.

The survey can be found at https://www.surveymonkey.com/s/2013SiebelSurvey.

https://www.surveymonkey.com/s/2013SiebelSurvey


Evaluating Career Risk Given the Market for Siebel

The dark side of the cloud is that it will require fewer IT resources and talent to run than

on-premise systems. This is part of a historic trend that has been happening for at least 200 years. In 1800, it took 90 percent of the population to grow enough food for the other

10 percent. One in ten people, including shopkeepers, sailors, tailors, printers and blacksmiths belonged to the other 10 percent besides farmers. By 1900, the ratio was about 40 percent farmers to 60 percent everyone else. One in four people could grow enough food

to feed the other six. Today, less than one percent of the population can grow enough food to feed the other 99 percent.

In the future, everyone in IT is going to have to plan their careers carefully to avoid falling into a growing pool of the underemployed or unemployed.

As of 2013, the demand for people qualified with Siebel skills is greater than the supply. No

one who has Siebel skills and wants to work in the field should fear being unemployed if they are willing to relocate or work remotely. Since Oracle's published roadmap for Siebel

extends until 2019 and its internal plans extend to 2028, it is safe to say that if you are 40 years old and you retire at 65, Siebel will still be in use in 2038. Since the average S&P firm can only be expected to be in business until 2028, the question arises if it is better to be

loyal to your employer or loyal to your skills.

As Siebel declines, some jobs will disappear sooner than other jobs. Some positions, such

as Siebel Administrator, will be in demand for many decades. Other positions, such as Siebel Developer, will go away sooner. Having Siebel skills qualifies most people for other jobs such as working on Microsoft Dynamics CRM or Salesforce.com.

The Constellation Point of View

We expect the salaries and billable rates for people with Siebel experience to increase in the future just as they are increasing for people with COBOL experience. In Constellation’s view, your best bet for the future is to be loyal to your skills and obtain as much training

and certification as possible to be best prepared for the future.

Disclosures

Your trust is important to us, and as such, we believe in being open and transparent about our financial relationships. With our clients’ permission, we publish their names on our

website.

The author has no financial interest in any of the companies mentioned in this report.


Endnotes

1 Seeing the Good, the Bad and the Ugly in Legacy Applications: How to Attack or Defend an Installed Base by Understanding How to Qualify the Success of Legacy Applications,

Constellation Research, by J. Bruce Daley, September 10, 2013.


Analyst Bio: J. Bruce Daley

J. Bruce Daley can be reached at [email protected].

J. Bruce Daley is Vice President and Principal Analyst at Constellation Research, Inc. He helps organizations realize the full value of their investment in legacy applications, vendors

establish stronger business ecosystems and individuals find more rewarding careers. His coverage areas includes business research themes in Next-Generation Customer Experience

and Technology Optimization and Innovation. Topics include Sales Force Automation, Mobile Sales Solutions, Professional Service Organizations and add-on products.

Industry Experience

In a field of specialists, Bruce is a generalist having hands-on experience with programming, database administration, database design, testing, project management, business analysis, pre-sales, sales, sales management, systems integration, consulting, event planning, radio,

industry analysis, financial analysis and Big Data.

Media Reach

Widely quoted in The Wall Street Journal, The New York Times, The Financial Times, The

International Herald Tribune, IEEE Spectrum, The San Jose Mercury News, The San Francisco Chronicle, CBS/MarketWatch, The Street.com, The Denver Post, The Rocky Mountain News, Computerland Sweden, The Deal and CNet, Bruce has also been a frequent

keynote speaker at industry events, including the Accenture Leadership Council, DCI, the Self Service Symposium and Johnson & Wales School of Business. He also founded the

Enterprise Software Summit.

Investor Influence

Bruce has conducted over 250 consultations with mutual funds, hedge funds and private

equity funds such as Agnos Group, AIM Management Group, Bain & Company, Bear Stearns, Brummer & Partners, Burgundy Asset Management, Cambium Capital, Camelot Management Corporation, Carlyle Group, CQ Partners, Credit Suisse, D.E. Shaw Company,

Deutsche Asset Management, Fidelity, Fortress Investment Group, GL Partners, Investor Growth Capital, JANA Partners, Janus, JPMorgan, Lehman Brothers, Maverick Capital,

Morgan Stanley, Neuberger Berman, Pioneer Investments, Polygon Investments, Porter Orlin, Scout Capital, Silver Point Capital, Silver Lake Technology Management, Stark Investments and TIAA-CREF, T. Rowe Price, among others.

He also co-brokered the sale of system integrator Blue Hammock Inc. to GCI International

(now named Collabera).

Patent

Systems and Methods for Distributed Testing of Software (Pending)

mailto:[email protected]

2 2013 Constellation Research, Inc. All rights reserved.

Education

Bruce attended Tufts University where he earned joint B.A. degrees in German and History.

He was Editor of Hemispheres, the school's journal of international relations, and played on

the lacrosse team.


About Constellation Research

Constellation Research explores the technologies and business models that not only disrupt

established players, but also create transformational innovation. We share our research insights with business leaders seeking more than just rubber stamp approval or rearview

mirror confirmation by traditional legacy analyst firms. Every piece of research begins by understanding how to deliver business value, applying real world experience and insights and incorporating disruptive technologies and innovative business models as

appropriate. Our mission is to identify, validate and share these insights with our clients.

As a result, our research community includes members of boards of directors, C-suite executives, line of business leaders and IT visionaries who are not afraid to challenge the

status quo. Most of our clients share a common trait - the passion for learning, innovating and delivering impactful results.

Organizational Highlights

Founded and headquartered in the San Francisco Bay Area, United States, in 2010. Named Institute of Industry Analyst Relations (IIAR) New Analyst Firm of the Year in

2011. Serving over 200 buy-side and sell-side clients around the globe.

Experienced research team with an average of 21 years of practitioner, management and industry experience.

Growing firm with 30 members, including 9 research analysts and futurists, 7 sales

professionals, 4 professional staff and a board of 10 industry-recognized advisors. Creators of the Constellation Supernova Awards - the industry's first and largest

recognition of innovators, pioneers and teams who apply emerging and disruptive technology to drive business value.

Organizers of the Constellation Connected Enterprise - an innovation summit and

best practices knowledge-sharing retreat for business leaders.

Website: www.ConstellationR.com Twitter: @ConstellationRG

Contact: [email protected] Sales: [email protected]

Unauthorized reproduction or distribution in whole or in part in any form, including photocopying, faxing, image scanning, e-mailing, digitization, or making available for electronic downloading is prohibited without written permission from Constellation Research, Inc. Prior to photocopying, scanning, and digitizing items for internal or personal use, please contact Constellation Research, Inc. All trade names, trademarks, or registered trademarks are trade names, trademarks, or registered trademarks of their respective owners.

Information contained in this publication has been compiled from sources believed to be reliable, but the accuracy of this information is not guaranteed. Constellation Research, Inc. disclaims all warranties and conditions with regard to the content, express or implied, including warranties of merchantability and fitness for a particular purpose, nor assumes any legal liability for the accuracy, completeness, or usefulness of any information contained herein. Any reference to a commercial product, process, or service does not imply or constitute an endorsement of the same by Constellation Research, Inc.

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