Tom Siebel Hates Me (And Anyone Else Asking The Tough Questions)

Tuesday May 14th 2002 by Joshua Greenbaum
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Siebel Systems, says our Enterprise Advisor columnist, is without a doubt the most closed-off, inaccessible, information-hostile public company in the software industry. Which makes Tom Seibel's claims of extraordinary customer satisfaction hard to swallow. (See Siebel Systems' response.)

In an industry not known for promoting the shy, quiet types, Tom Siebel stands out. His arrogance and self-assurance have made him the No. 1 software executive people love to hate. His partners live in fear and loathing, his competitors become apoplectic at the mention of his name, and analysts and the press are unanimous in their frustration at the company's closed-door, no-access-is-good policy.

Ironically, the only people who seem to love Siebel are his customers -- of course, you have to take Tom's word on that. At every quarterly call, Tom claims his customer satisfaction ratings are in the stratosphere. Last fall he claimed a 96% approval rating from his customers (identical, incidentally, to his self-reported satisfaction rating from his employees). This winter customer satisfaction was at 95% and this spring it was "the highest it has ever been in the company's history."

Customers love him, employees love him, everyone else hates him. So what's the problem? The problem is that, absent the full disclosure and transparency that is more and more necessary in this post dot-bomb, post-Enron era, it's getting harder to believe what Siebel says. This company is, without a doubt, the most closed-off, inaccessible, information-hostile public company in the software industry. Siebel sets the standard for non-disclosure and non-access.

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And herein lies the real issue. When there is no way to independently verify the things we do know that beggar belief -- such as universal customer satisfaction -- we have to worry about the things we don't know as well.

Enron aside (whose executives made no bones about their hostility to outside scrutiny), the software industry has a lot of experience with the effects of non-disclosure and non-transparency. The meltdown of Baan prior to its fire sale acquisition by Invensys was a classic case. While CEO Tom Tinsley held off the press and analyst community with his disdain, the Baan brothers played fast and loose with the books, the stock, and just about everything else in the company.

This methodology was repeated by Messrs. Lernhout and Hauspie as they took their eponymous speech synthesis/voice recognition company from market leadership to receivership.

It doesn't have to get that bad, but even a company like Computer Associates can get burned by non-transparency. A sudden shift in CA's accounting methods, which effectively confused and baffled anyone who tried to track the company, led to an ugly, public proxy battle and the loss of a lot of good-will in the marketplace.

Then there was Ariba, making claims to financial analysts about the extent of its network and market opportunity that were beyond belief. Did I mention CommerceOne? How about the rest of the dot-bomb gang? It's pretty obvious that the more closed off a company, and the more outlandish its claims, the greater the risk for catastrophic failure.

Oracle's Dose Of Reality

Does this mean Siebel is next on my list of miscreant software companies? There's only one way to tell, and that is to get a real, objective inside view of what's happening at Siebel. That means more openness, more independent scrutiny, more access. Sure, it's painful, but sometimes that pain is good for everyone.

Take the study published last January by Morgan Stanley regarding Oracle's applications users. Done in conjunction the independent Oracle Applications User Group (OAUG), the study showed in concrete detail what had become obvious to close observers: Oracle had a real problem with user satisfaction. I'm sure there was a lot of yelling in Redwood Shores when the study came out. But the end result was a rapprochement with OAUG and the assignment of a senior vice president to fix the customer satisfaction problem. If and when Oracle pulls out of its current slump, it will be in large part due to the impact this independent study had.

Of course, this would never happen at Siebel, with its perfect customer satisfaction rating. Or would it?

With no one in the press or analyst community able to objectively verify his claims, we'll never know whether Siebel is the best thing that ever happened to software, or just another closed-door disaster waiting to happen. Until it's too late.

Joshua Greenbaum is a principal with Enterprise Applications Consulting, a technology and marketing consultancy in Daly City, Calif.

(Editor's Note: Click on the Page 2 link to see a response from Siebel Systems.)

(Editor's note: The following is a letter from Siebel Systems replying to Josh Greenbaum's recent column.)

In response to Mr. Greenbaum's highly inflammatory column, we believe it is necessary to make your readers aware of the following facts to make a clear distinction between truth and personal agenda.

It is very curious to us that Mr. Greenbaum would launch such a highly personal attack on Tom Siebel when he has never met or spoken to Mr. Siebel and has never made any attempts to do so. It is impossible for us to provide access when he has failed to contact the appropriate people at the company to secure such access. Frankly, we are mystified by his highly emotional rantings -- especially given that they lack any basis in fact or reality -- and it appears to us that this is a deliberate and irresponsible attempt by Mr. Greenbaum to cause harm to Siebel Systems and Mr. Siebel.

So let's get to the facts. Mr. Greenbaum's "closed-door" criticism is entirely inaccurate. We are a global company that receives an average of 1,200 U.S. and international media and analyst inquiries every quarter. Each quarter we also participate in roughly 350 media interviews. We make every effort to respond to and provide additional information for each inquiry as quickly as possible. However, from time to time we need to prioritize our responses. During particularly busy times, calls may not be immediately returned to people with whom we are not familiar or who lack a certain level of stature in the IT industry. I am sure that Mr. Greenbaum understands the need for prioritized communications.

Mr. Greenbaum's column also overlooks the fact that Siebel Systems is recognized throughout the industry for the clarity, transparency, and quality of its financial disclosures. For example, Siebel Systems does not use pro-forma accounting methods, nor have we ever set up any off balance sheet entities or transactions. Furthermore, our public disclosures are among the most accurate and comprehensive in the world. It is wholly inappropriate and potentially actionable for Mr. Greenbaum to question our financial integrity without examining any relevant facts.

Finally, Mr. Greenbaum's criticism of our commitment to regularly measuring customer and employee satisfaction levels is unfounded and misguided. Siebel Systems will always consider the satisfaction of its customers and employees to be one of its highest corporate priorities. Notably absent from his column is the fact that Siebel Systems employs an outside firm, Satmetrix, to conduct extensive surveys each and every quarter. Satmetrix also conducts similar research for other major corporations in the IT industry, and Siebel Systems regularly receives the highest scores. The results speak for themselves. Ninety-four percent of our customers report that they would be pleased to act as our references. Ninety-seven percent plan to continue purchasing their customer relationship management (CRM) and employee relationship management (ERM) software from Siebel Systems.

In the future, we invite anyone on your staff to investigate relevant facts about Siebel Systems to ensure truthfulness is upheld at your publication.

Sincerely,

Stacey Wueste
Senior Director Public Relations
Siebel Systems, Inc.

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