Will Nexus save Siebel?

Siebel Systems desperately needs to grow again -- and with its traditional enterprise software market sluggish and saturated, expanding into new areas is the company's best chance. Within the next few months, the company will unveil Project Nexus, a custom-CRM (customer relationship management) offering executives hope will unlock a lucrative new market. Several years in development, the initiative represents Siebel's latest attempt to regain the vanguard of the software market it pioneered.

The quickest way to understand the trouble-plagued Siebel is to look at the numbers. For years, the company was the sales leader in prebuilt "packaged" CRM software, ringing up software license revenue of more than $1 billion in 2000 and 2001. By the end of its 2004 fiscal year, Siebel's license sales had fallen to half that.

To help revive its flagging business, Siebel is preparing to move into what it sees as the biggest untapped market for CRM software: custom development. In a June presentation to Siebel shareholders, Chief Executive Officer (CEO) George Shaheen flashed a slide illustrating Siebel's view of the overall CRM market. Siebel estimated the total annual market for packaged CRM, its traditional core product line, at $5.5 billion. It estimated the custom CRM market at $24 billion. (Siebel sourced the spending estimates to research from IDC, AMR Research Inc. and its own market analysis.)

A spokesman said the company expects to formally launch its custom product, code-named Project Nexus, by September. Its roots go back nearly three years, to Siebel's October 2002 decision to work closely with Microsoft Corp. and IBM Corp. to natively support both .Net and J2EE (Java 2 Enterprise Edition), according to Stacey Schneider, a Siebel technology product marketing director.

That's when Siebel began focusing on building an SOA (service-oriented architecture) framework for its applications, Schneider said. The goal is to let customers more easily tailor Siebel's applications to match their business processes. Siebel 7.5.3, released in mid-2003, incorporated Siebel's initial SOA work, which continued in Siebel 7.7 with user-interface changes and other enhancements aimed at simplifying transaction processes. The architectural overhaul will culminate in Siebel 8.0, due next year. The fully Web-services-oriented software will include changes like a new rules engine intended to improve workflow management.

The work Siebel did to expose as Web services the components of its CRM system allowed the company to then take that work a step further and develop a product offering around its components and CRM design expertise, Schneider said. Confusingly, the company uses 'Nexus' to refer both to its SOA framework and to the forthcoming custom product line derived from the SOA development; that line is likely to acquire a new name when it formally debuts. The Nexus product line will be the one Siebel pitches to customers with needs too specialized for commercial CRM software.

"We've seen the need for a number of years," Schneider said. "The custom market [buyers] were always in the mentality of, 'We have to build it ourselves, because there's nobody out there who can possible give us a head start.'"