Analytics helps Siebel win Sierra Health deal

CRM maker focusing more on analytics

With Siebel Systems Inc.'s core CRM (customer relationship management) software sales slipping, analytics is one of the new markets Siebel has targeted as a key growth opportunity. Its investment there paid off in at least one recent customer win: Sierra Health Services Inc. said last week it has picked Siebel to underpin a multi-million dollar CRM overhaul, and the company's chief information officer (CIO) cited Siebel's analytics offerings as a major factor in the deal.

Las Vegas-based Sierra Health currently uses a 6-year-old CRM system built around software from Onyx Software Corp. to track interactions with the health-care company's 580,000 customers. As the hardware and operating-system software supporting the system approaches its retirement age, Sierra Health decided to start over from scratch.

"It was highly customized, and that creates roadblocks to be able to upgrade cost-effectively," said CIO Bob Schaich. "We knew we essentially had to have a complete replacement with the latest-and-greatest."

Sierra Health opened its search to a number of vendors, and eventually narrowed its list to Siebel and Onyx. After several months of extensive due diligence and discussions with the two companies, Sierra Health opted for Siebel. Siebel's analytics software was a major selling point, according to Schaich. "That was a real value-add for us," he said. "Onyx has some similar products, but we felt the Siebel analytics would be a better fit for our environment."

Analytics has become one of Siebel's fastest growing product lines, with software license revenue rising 44 percent last year, to US$111.6 million, and comprising more than 22 percent of the company's total annual license revenue. In the same period, Siebel's core sales, marketing and service software license revenue dropped 10 percent. In a June letter to Siebel's shareholders, Chief Executive Officer George Shaheen cited analytics as one of the four key growth areas in which Siebel will concentrate its development work.

Sierra Health's Schaich plans to use the analytics software to study how his company's sales volume in various product areas lives up to growth goals. Customer retention programs and marketing campaigns will also be measured on their effectiveness.

Sierra Health is planning a phased rollout, with its first product line, individual insurance, scheduled to go live on Siebel by the end of the year. The entire CRM overhaul -- including software, hardware, services and some additional third-party applications -- is budgeted at around $5 million. Sierra Health is treating the project as a capital expenditure, Schaich said, although the company is also setting certain ROI (return on investment) targets he declined to disclose.

"We have some numbers already documented that internally we'll be measuring against, in terms of improvements we expect to see from the Siebel implementation," he said.

Copyright © 2005 IDG Communications, Inc.

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