Siebel Systems went though seven complete enterprise software upgrades last year. No big deal, according to CIO Mark Sunday, who says the only truly effective IT infrastructure is one that’s constantly being improved.
It’s been a tough couple of years for Siebel Systems, and 2003 has been especially bleak. The global economic downturn hit the enterprise software industry hard, and Siebel has struggled with the same grim market conditions that plague many vendors. It didn’t help that as CRM projects in general started getting reputations as badly-behaved children (previously the province of ERP), the company, which was once the poster child for customer relationship management software, became equally synonymous with the new enfante terrible.
Siebel’s profit in the first quarter of 2003 dropped 93 per cent to $US4.6 million, and revenue fell 70 per cent to $US332.8 million (down from earnings of $US64.6 million on revenue of $US477.8 million in the same quarter last year). Hot on the heels of these results being made public came the news in April that the company planned to lay off about 250 of its 5850 workers.
CIO Mark Sunday says that while Siebel has certainly been affected by the global economic downturn, it’s not all doom and gloom. For one thing, despite declining sales the company continues to sell more CRM applications than its competitors, Sunday says. Siebel logged $US700 million in software revenue in 2002, which according to Gartner is about as much as SAP AG, PeopleSoft and Oracle combined. More importantly, for Sunday at least, Siebel’s internal IT operation has so far weathered the storm unscathed.
Sunday credits the healthy state of IT to a processes and systems revamp undertaken by Siebel in 2001. “We’d been growing so rapidly throughout the late 90s that when things started to slow down in 2001, it was a great relief for our two big service organisations: IT and the back-office administrative/financial functions,” he says. “Instead of dealing with a company that was growing well over 100 per cent a year, it gave us the opportunity to focus on improving our internal operations and put in place the infrastructure that would enable us to move ahead with the next period of growth.”
Sunday’s team of 231 provides IT support to more than 5500 Siebel employees in 28 countries. The IT group is responsible for looking after the IT needs of all of Siebel’s regular business services as well as those of the company’s 10 engineering centres around the world. It’s an unusual move for a company that does as much software development as Siebel. Many similar organisations have simply split off engineering from their infrastructure, creating a separate team devoted solely to software development needs.
“At Siebel the CIO role is a little bit broader than at some companies,” Sunday says. “But then, last time I looked 231 is about half the number of IT staff that Gartner says a typical software company should have. I’ll put our infrastructure and our business processes up against any company in the world.”
The Need for Speed
“Speed is everything,” says Sunday, speaking with obvious pride about the infrastructure that his IT organisation is responsible for. Indeed, speed is at the core of Sunday’s vision for Siebel, what he describes as the company’s “process factory”.
Most companies upgrade their enterprise software once every year or two. Siebel now re-examines its entire applications infrastructure and re-engineers its processes at regular two-month intervals. Last year Siebel did seven complete enterprise software upgrades, and Sunday says the company is on track to do a similar number this year. “Our SLA to our engineering group is: Within two weeks after a build is out of engineering we can roll it across our entire company for a major release, four days for minor releases,” he says.
“We’ve gotten into these 60-day drumbeats, where we review the processes we’re using all around the company and we rev them,” Sunday says. “Every 60 days we do a new release of our entire enterprise, which includes all of our CRM and PRM [partner relationship management], all of our employee relationship management and all of our back-office as well.”
“My focus and all my counsel is centred around this idea of continuous improvement: putting things in a process of evolving change, built on an architecture that enables you to move rapidly. Fundamentally this begins with an overall understanding of what your endgame is. Understand what the key architectural tenets are to achieve that, and put in place an integration platform that allows the components to work together so you can realise the benefits.”
According to Sunday, the emphasis he places on change and constant improvement is the legacy of his years spent working in the semiconductor industry, where he did long stints with Texas Instruments, ST Microelectronics and Motorola. “I guess it goes back to my history in the semiconductor industry, where everything is focused on continuous improvement of your manufacturing processes,” he says. “Well, we’re adapting the same thing to all of our business processes and making sure our infrastructure supports that.
“Large companies, public organisations and others who have created a great number of legacy systems have a really difficult time with this,” Sunday says. “They can’t envision how they can rapidly refine their processes. I say, don’t look at major projects that take years. A lot of people finish a big project and say: ‘It’s behind us.’ It’s not like a building; you don’t just leave it there when you are done. Every single quarter your business processes and the technology that supports them should be better than the previous quarter.”
The CIO Fits, After All
Businesses of all stripes are struggling to keep customer initiatives alive in the current environment of curtailed spending. So where does Sunday think that the CIO fits into CRM projects — especially given that Siebel has tended to target other C-suite execs for sign-off on CRM projects in the past?
“In the late 90s, when everything was moving very rapidly, the focus was on speed, not necessarily on overall integration and efficiency,” says Sunday. “With the downturn in the economy, we’ve seen a swing to where CIOs are now being asked: ‘How do we leverage our IT investment?’ A lot of the questions that weren’t asked in the 90s are being asked now.
“We at Siebel have seen the role of the CIO elevated substantially, because companies are now doing the right things. They want to make sure they get the highest return from their IT investment, which wasn’t necessarily the area of focus a few years ago. They want to make sure that stuff is integrated and they want to do it efficiently. And they want to drive down the total cost of ownership. The CIO is the point person to make this happen.
“CIOs have an increasingly important role, not only in CRM but across every aspect of how a company continues to refine its processes and how it automates and institutionalises those with technology.”
Tradition with a Mission
When it comes to supporting Siebel’s business, Sunday views his own duties as CIO in a very traditional light. As he sees it, IT is there to provide business processes that enable Siebel’s employees and partners to better serve the company’s customers. Sunday claims what makes his role as CIO different are four additional missions.
First, Siebel’s internal use of IT is a vital source of new capability, coming up with ideas that eventually turn up in the products Siebel brings to market. “We have by far the broadest implementation and we’re always on the latest release — usually releases that haven’t been released to our customers yet — so we’re always pushing forward with new functionality,” Sunday says. He claims the IT team was behind 200 new features in Siebel’s 7.5 release and 300 for its next version. Given this involvement, it’s fitting that Sunday’s second responsibility is quality assurance. Since the company must go live on all products before they ship to customers, it’s Sunday’s duty to validate functionality, performance, reliability and scalability on a global scale. “Not my favourite part of the job,” he admits.
Sunday’s third mission is in fact not all that “different” than it is for most CIOs: he and his team have plenty of integration chores. “We’re just like any other customer who receives software from Siebel — it’s got to work with the database, the servers, the middleware, the digital certificates, the list goes on and on. I like to think we’ve played an important role in engineering a complete solution, as opposed to just the software our company ships.”
Sunday also spends a fair amount of the time on the road, travelling the world and sharing what Siebel does internally with business prospects and existing customers. A tough ask, considering that the great expectations for CRM have largely failed the reality test. A recent survey conducted by US brokerage firm Merrill Lynch found that only 45 per cent of customers are fully satisfied with their CRM implementation. And in April, market research company Nucleus spoke to 23 Siebel customers and reported that 61 per cent of them were unhappy because they had not made their investment back within two years.
“I’ve been doing systems implementation for over 25 years and rarely has it been a technology issue that’s affected the effectiveness of leveraging business process improvements,” Sunday says. “My experience has been that the reasons for failure usually have to do with how projects are managed. Typically it comes down to lack of executive direction, executive support, discontinuity, or trying to do something so large that you never get it done because the factors surrounding it — either the people, the budget or the external environment — have changed.”
Sunday suggests a back to basics approach, but it’s a familiar pitch. “You need to make sure there’s strong executive support, and you need to have very clear goals,” he says. “When you’re addressing CRM you really need a vision of where you want to go, but you need to carve it off into small projects that you can execute. As we like to say here: plan big, but act small. Pick tangible deliverables and be very fast in your execution.
“At Siebel one of our fundamental tenets is: A good plan quickly executed is far better than a great plan that never comes to fruition.” Even God chose to rest on Sunday. With his “process factory vision and those 60-day drumbeats, it would appear the option is less clear for Sunday.
Getting IT Safe and Reliable
Mark Sunday says the two biggest challenges that he faced as Siebel’s CIO in 2002 involved security and analytics.
On the security side, Siebel’s management became concerned the company was exposed from a business continuity perspective following September 11, so Sunday migrated all computing to two data centres in Utah. “They are fully redundant and load balanced. Both of them are in operation all the time and we’re sharing the load ‘task by task’ across the two of them,” he says.
Sunday’s other priority in 2002 was a project he calls “analytics for everyone”.
“So much information goes into systems, but are people really getting out what they need?” he says. “From the executive team to middle management, down to an individual who works in our IT customer-care call centre, you have to ask: Are they getting the information that’s germane to them? Are they being notified about exceptions and the actions they have to take?”
In a bid to ensure the right information is always delivered to workers who need it, Sunday initiated a drive to create personalised dashboards for every Siebel employee. Now more than 80 per cent complete, Sunday claims that the experience of creating these dashboards has shown him firsthand exactly how important data quality can be to achieving business benefits. “I’m finding through my experience that one of the big issues is not just having applications talk together, but maintaining data consistency and data integrity across different applications,” he says.
According to Sunday, Siebel has had to put a “significant focus” on limiting duplication and redundancy. “We’ve done things like integrate with specialists like Dun & Bradstreet, so that now on a regular basis they correlate our internal account information with external databases to ensure their integrity and reliability,” Sunday says. “There are also a lot of vehicles that can help you in terms of real-time analysis as data is entered — things which check: Does this make sense? Is it inconsistent? Is it duplicate? Is it redundant?”
“Fundamentally, the quality of anything that you do down the stream has to start off with the integrity of your data,” Sunday says.
hiring, firing, inspiring
A Change of HeartsBy Susan Cramm
The success of change initiatives depends on employee enthusiasm rather than leadership directives
Most leaders seem to interpret the phrase “change management” to mean “a way to get the organisation to do what I want it to do”. They follow the letter rather than the spirit of change management. As a result, their change management plans are a weak, tasteless broth of communication meetings, logos, Lucite paperweights, Tshirts and employee idea programs. One of my favourite sayings is: “People don’t hate change; they hate the promise of change unfulfilled”. That is, everybody hates le grand programme du jour that starts with a bang and ends with a whimper. With each successive program launch, workers become increasingly more cynical and, over time, stop listening and lose hope.
The promise of change for the better goes unfulfilled because the vision never migrates from the head of the leader to the hands of the employees. Leaders must accept the fact that even the best strategic planning processes result in flawed visions — flawed because there is much that is unknown and not directly controllable. Some of the unknown lies outside of the organisation and in the future, but the bulk of the unknown can be found in the head of the people who were not involved in strategy-making.
The true spirit of change management is enabling all employees to express and apply their knowledge in a way that benefits each of them and the organisation. If you really want to create a better tomorrow, you have to engage the heads and capture the hearts of your people before the hands of the organisation can be mobilised.
ENGAGE THE HEAD. You need to give people a reason why change is necessary and why it is necessary now. Create a sense of urgency by using the voice of the customer. Take your fuzzy vision and clarify it by talking to the people who serve the customer. Then work on your vision until it is crystal clear, and you can communicate it in five minutes. Your five-minute elevator speech should be structured like a story, respecting the past by recognising accomplishments and strengths, frankly discussing current challenges and what change needs to occur, and painting a picture of the better day ahead. As corporate change guru Terry Paulson says: “The difference between a vision and a hallucination is the number of people who can see it.”
CAPTURE THE HEART. People are motivated by purpose, affiliation and security. You need to build all of those into your change program. Motivations are personal, so you must enlist people one at a time by understanding what drives them and bringing their resistance to the surface. Ask questions to make it easy for them to tell you what is working well, what is going wrong, ideas they have to make things better, and all the reasons why change should not happen or is not going well. Keep in mind that silence is resistance carried out by other means.
Again, remember to give your staff a “noble purpose” by articulating the vision in terms of what’s good for the customer. Help people affiliate by teaming them with others on an important initiative. Finally, be honest with employees about the likely implications of change. Offer “soft landings” (such as education programs, severance packages and retention bonuses) for those who will lose their jobs or will need to change jobs and skills.
FREE THE HANDS. To build momentum for your change program, pick some easy projects so that people can taste early wins. Set up clear performance measurements so that progress is transparent to everyone. Define rules to ensure that people are operating consistently with your vision for change, while at the same time giving people plenty of freedom to apply their creativity. Help people recognise when they are overloaded, and make it easy for them to ask for help.
There is nothing more exciting than working for a visionary, passionate leader. And there is nothing more frustrating than seeing visionary leaders hamstrung by their inability to create the future. In the words of organisational theorist and author Peter Senge: “What [many wannabe leaders] never grasp is that the natural energy for changing reality comes from holding a picture of what might be that is more important to people than what is.”
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