I was considering SEBL for a bounce play, negative study out on them today, anyone think it will matter?
Negative ROI On Software Deployments
Business Editors
REPEATING...
WELLESLEY, Mass.--(BUSINESS WIRE)--Sept. 23, 2002--
Nucleus Research Study Also Finds Siebel Installations Cost
$18,000/User Per Year; Reference Customers Cite Exorbitant License,
Consulting and Maintenance Costs as Key ROI Inhibitors
More than 61 percent of Siebel Systems'(NASDAQ: SEBL) reference
customers report a negative return-on-investment (ROI) on their Siebel
implementations after more than two years of use, according to a
report issued today by Nucleus Research (www.NucleusResearch.com).
The independent research found Siebel customers listed as
references on the company's Web site experienced business results that
directly contradict marketing claims from the software giant that its
customers receive positive ROI in fewer than 10 months. Saddled with a
per user, per year cost of more than $18,000 (not including training
and hardware), longer-than-expected implementation cycle and
challenging Siebel/customer relationship issues, Nucleus Research's
study found Siebel's e-business solutions are an expensive
proposition--even for the company's marquee customers.
A free copy of the report is available at www.NucleusResearch.com.
Nucleus Research, with corporate offices in Massachusetts and
additional offices in Europe , has conducted thousands of ROI studies
for Global 2,000 companies, measuring the return on their enterprise
technology investments--a key concern for CFOs, CIOs and other senior
executives.
In conducting the Siebel report, Nucleus initially intended to
study Siebel's marquee customers--those identified on the "customer
examples" section of the Siebel Web site--to learn common themes and
best practices for achieving a positive ROI from Siebel. These
findings could also be valuable to corporations considering customer
relationship management software solutions, one of the fastest growing
segments of the information technology industry. After contacting 66
of the customers profiled on Siebel's Web site, the tenor of the
planned report changed dramatically, as most of the customers
interviewed revealed they had spent significantly more on, and
received far less from, their Siebel implementations than they
anticipated.
"We expected to find best practices for achieving rapid ROI from
Siebel's reference customers," said Rebecca Wettemann, Nucleus
Research's, vice president of research. "What we found instead was
expensive deployments, limited benefits and above all, supposedly
satisfied customers who were dissatisfied with their deployments. At
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Page 2 of 4
more than $18,000 per user per year, Siebel is clearly a costly
proposition, and these marquee customers by and large don't feel as if
they're getting their money's worth."
According to its Web site, Siebel claims that the average
implementation allows customers to achieve revenue increase of 12
percent, an employee productivity increase of 20 percent, and an
increase in customer satisfaction of 20 percent, each of which
contribute to positive ROI in less than ten months.
In reality, more than 61 percent of the reference customers
surveyed did not believe they had achieved a positive ROI from their
Siebel investment, citing challenges in training and customization. A
startling 78 percent cited a lack of user-friendliness as a challenge
to achieving positive returns. "The complexity of the product is a
challenge," lamented one customer. "It is not as intuitive and user
friendly as we had hoped." Sixty-five percent cited rigidity and
difficulty in customization as a roadblock to positive ROI.
Too Much Functionality--At A High Price Point
The Nucleus report found that most customers are using only half
of the potential functionality from their Siebel implementation, even
after an average implementation time of more than two years. Some
customers have utilized a phased deployment strategy--as users become
more comfortable with the solution, additional applications are rolled
out. However, the challenge of this approach is that it significantly
slows the realization of benefits while increasing and extending costs
of consulting, training and personnel. As one customer said, "We will
always be deploying Siebel."
Excessive functionality, complex customization and lengthy
implementations have made Siebel a costly proposition. Nucleus found
the average cost of a Siebel implementation--independent of training
and hardware costs, which varied widely--to be $6.59 million, or an
average of $18,040 per user, per year. Customers found Siebel's
license price expensive compared to their other software investments,
and were stymied by the company's complex pricing structures and
exorbitant maintenance fees.
Many of the customers interviewed used Siebel Professional
Services or a Siebel Alliance Partner to support solution development,
customization, deployment, or testing. In a normal enterprise software
deployment, one would expect to have higher costs during the first
years of implementation, and progressively lower costs over time.
However, most customers were increasing their consulting and personnel
investment in supporting Siebel over time, with an average consulting
spend of $2.667 million. "Siebel's rates for service are astronomical
compared to other providers without providing greater value," said one
customer.
Additional findings from the Nucleus/Siebel report include the
following:
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-- Siebel's customers suffer through lengthy, expensive
deployments--Fifty seven percent of Siebel customers
interviewed said their deployment took longer than planned; 55
percent said they spent more money implementing Siebel than
they had budgeted.
-- Siebel's customers are paying exorbitant maintenance fees--The
average annual license maintenance fee for Siebel ranged from
15 to 33 percent of the license fee, with an average of 18.2
percent, or $1,689 per user. "We pay around $100.000 a year in
ongoing maintenance fees, I'm very shocked about that--it
wasn't sold that way," said one customer.
-- Siebel provides contradictory quotes that belie the true
feelings of their reference customers--On many occasions,
Siebel's quotes on its Web site do not match the current
feelings of the reference customers quoted. According to
Siebel's Web site, one customer said the deployment went
smoothly and on time but when interviewed by Nucleus, the same
customer said, "It took longer than we had planned. They
couldn't finish it. We couldn't do it ourselves. The Siebel
alliance partner didn't have adequate resources, and they
ended up fighting with Siebel because the project wasn't going
smoothly."
-- Siebel's customers have difficult relationships with
Siebel--Nowhere was there more of a discrepancy between the
quotes on the Siebel Web site and what customers told Nucleus
than in the comments about the customers' experience with
Siebel. For example, according to Siebel's Web site, one
customer said Siebel did an excellent job of making sure
technical and business needs were met; when interviewed by
Nucleus, the same contact said, "They're very arrogant; very
full of themselves. Their service staff is unresponsive to the
point that I use their services as little as we can."
Study Methodology
Nucleus Research contacted 66 customers profiled on the company's
Web site. Those who agreed to participate in telephone interviews were
asked questions about factors of their Siebel deployment that would
impact ROI, including the following:
-- How, why and when they selected Siebel;
-- How many users are using what functionality;
-- The greatest areas of returns;
-- Project spending including software and consulting;
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-- Customization and deployment strategy; and
-- Deployment challenges.
The full findings of the study can be found in Nucleus Research's
published report, available for free at www.NucleusResearch.com.
About Nucleus Research
Nucleus Research is a global research and advisory firm whose
analysts combine financial and technology expertise to accurately
measure the true return on investment of enterprise technology
initiatives throughout their life cycle. Nucleus has conducted
thousands of ROI studies for Global 2000 companies such as Merrill
Lynch, Lucent and Wilsons Leather, using an uncompromising set of
processes and tools to evaluate the financial return of their IT
assets, from selection and deployment to upgrade and retirement.
Although Nucleus's ROI assessment methodology can be applied to any
technology investment, the company's specific areas of expertise
include Web services and integration, supply chain applications,
e-commerce applications, procurement applications, CRM, ERP,
e-learning, collaborative computing, and wireless and handhelds.
Nucleus Research's charter is to aid end-user organizations in
making intelligent and profitable IT decisions, and it prides itself
on its vendor independence and product neutrality. The company was
founded in 2000 by former senior executives from International Data
Corportation (IDC), Gartner/Dataquest and AMR Research, and is
headquartered in Wellesley, Mass., with additional offices in London
and Paris. More information can be found at www.NucleusResearch.com.
--30--vp/ny*
CONTACT: SparkSource, Inc.
Ed Harrison
eharrison@sparksource.com
or
Mike DiLorenzo
dilo@sparksource.com
781/274-6061
KEYWORD: MASSACHUSETTS
INDUSTRY KEYWORD: INTERNET SOFTWARE
SOURCE: Nucleus Research
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