The Daily Deal, August 22, 2001
Industry Insight Technology

Catch the Web Site

by Susan Webber

Thomas Siebel's book is more likely to be cheered by his company's shareholders than by anyone interested in using technology to manage customer relationships

Books by chief executives aren't what they used to be. Once, they were written at the end of a career to contribute to management knowledge, as with Alfred Sloan's "My Years at General Motors," or David Packard's "The HP Way." Lately, however, CEO authors have seemed mainly interested in self-aggrandizement, either as intellectuals (Walter Wriston's "The Twilight of Sovereignty") or heroes (Donald Trump's "The Art of the Deal").

"Taking Care of eBusiness" by Thomas M. Siebel, founder and chief executive of Siebel Systems Inc., exemplifies the latest phase of this sorry devolution: the CEO book as sales brochure. While shareholders may applaud this trend, it is less clear how it serves the reader.

Siebel Systems specializes in high-end databases and applications to manage customer servicing "Taking Care of eBusiness" sets out to demonstrate the necessity of using advanced technology to manage customer relationships. It defines eBusiness not as how businesses use the Internet, but as "the strategic use of information technology to interact with customers, prospects, and partners through multiple communication and distribution channels."

Its early chapters argue that product differentiation is no longer a viable means to compete; "delighting customers" is the royal road to success, since high customer satisfaction correlates with higher retention rates. It sets forth eight precepts of "eBusiness," such as "optimize the value of each customer," with case studies from companies like IBM, Honeywell, and Quick & Reilly , and concludes with a five-step implementation program.

A dispassionate treatment of this topic would be very valuable for both senior executives and information technology managers. "Taking Care of eBusiness" is anything but that.

Too often, its grandiose and heavy-handed style strains credulity. Consider: "....boardrooms and executive offices everywhere are filled with debates at the highest level, centered on one question: How do we turn our business into an eBusiness? Organizations of every size, on every continent, and in every industry are engaged in this sober introspection." I have trouble imagining either the head of the research station in Antarctica or the owner of the local nail salon giving this issue any thought.

"Taking Care of eBusiness" suffers from three major flaws. First, it advocates collecting and analyzing data beyond the point of likely utility. One of the precepts of managerial economics is that information has a cost, and decision-makers must deal with uncertainty, because developing perfect information is too expensive.

While "Taking Care of eBusiness" describes projects where the technology clearly improved productivity - such as integrating disparate databases and enabling call center personnel to see the content of recent customer e-mails - it also advocates dubious undertakings. For example, it repeatedly recommends implementing an "optimized ROI based multichannel system of sales, marketing, and service."

The allocation of the numerous shared sales and marketing costs make this exercise suspect. And how would you ever capture the fact, much the less properly allocate revenues, for a customer that visited a retailer's web site multiple times before buying in a store?

Similarly, much of the gathering and massaging of customer data that it recommends is tantamount to data mining, and historically, 70% of data mining projects have failed. New concerns about consumer privacy add a further, unacknowledged, impediment to this process.

Second, the advice on executing projects is too general to be of much value. The section on implementation is old hat for those who know a smidgen about managing technology or change management Exhortations like "maintain a bias for action" and "prototype rapidly, test, and adjust" are not explained in sufficient detail. And the case studies largely skipped the implementation process. By contrast, Charles Pottruck, CEO of Charles Schwab & Co., in "Clicks and Mortar," provided tips on managing technology projects that were far more practical and helpful.

Third, and most glaring, is that Siebel incorrectly creates the image of unalloyed client success. Yet a Gartner Group study found that 50% of the customer relationship management projects fail; The Economist recently cited a failure rate of two-thirds. While mergers and acquisitions show equally dismal results, the principals understand the odds and (hopefully) take steps to mitigate risks. Without acknowledging and seeking to understand why many CRM projects founder, how can companies will steer a better course?

Perhaps the fundamental flaw of this work is that it is two years behind the time. It is an artifact of an era of blind faith in technology, when companies that took a sober approach were derided as "not getting it" or worse, roadkill in the making. This headlong rush to invest in overhyped technologies produced a massive financial hangover. But that's what results when fear and greed gain ascendance over critical thought.

Since "Taking Care of eBusiness" is all about selling Siebel Systems, readers are better off using the web site. It's more straightforward about its motives, the graphics are better, it's a faster read and it's free.