Midmarket Woes Plague Siebel

The company, which made its name in the enterprise software market, does not have the partners nor channel infrastructure in place to attack the burgeoning midmarket, solution providers said.

Terry Petrzelka, president of Tectura, a Tempe, Ariz.-based CRM specialist that does Siebel integration, said there are only a handful of Siebel partners focused on midmarket opportunities. "The market is much, much larger than those few can handle," he said. "[Siebel is] just a little out of touch with this market segment."

Siebel's shortcomings are likely to come into sharper focus now that Microsoft CRM is available, solution providers said. Microsoft said it has more than 700 partners in North America selling the product.

Siebel last summer quietly dismantled the Ace Program it had dedicated to training solution providers for the midmarket. Siebel said the 10 original Ace partners are currently in maintenance mode. Siebel has eight Global Strategic partners that serve enterprise accounts and an additional 50 Strategic partners that also target enterprise accounts.

David Schmaier, executive vice president of San Mateo-based Siebel, defended the company's midmarket partner coverage. He said Siebel's main thrust in this segment is telesales prospecting. "The primary way we work is through telesales. %85 We found that third parties are not as effective."

That contention alone shows that Siebel does not have a grasp of the program investments necessary to win in the midmarket, partners said. "These [midmarket] folks aren't stupid enough to buy software over the phone. What telesales will do is get you leads, but it's nothing compared to what Microsoft and its channel are preparing," said one New York-area solution provider.

"Midmarket, [midsize] enterprise customers want love and care. But they want it up close and personal. No more of these long-distance romances," said a West Coast Siebel and Microsoft partner.

"These customers have requirements that are as challenging as those of enterprise accounts and need the same service delivery model," Petrzelka added.

Siebel does have its partisans. Adam Honig, president of Akibia Consulting, said the Boston-based company "just closed a midmarket deal with a company under $100 million. Siebel telesales got the lead and called us."

Siebel defines the midmarket as companies with $50 million to $200 million in annual revenue but does not break out its midmarket revenue.

Rick Sherlund, an analyst at Goldman Sachs, said Siebel's midmarket revenue has dropped to about 15 percent of its total sales from about 20 percent in the past.

Siebel has maintained that it is difficult to make money in the midmarket, Sherlund said.