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Lawrie Out at Siebel
By Jim Wagner

April 13, 2005

UPDATED: J. Michael Lawrie has resigned as CEO of CRM software maker Siebel (Quote, Chart), less than a year after he took the reins of the company.

Effective immediately, George Shaheen, the former CEO of consulting and outsourcing company Accenture (Quote, Chart), formerly known as Andersen Consulting, is stepping into the slot.

“If you look at the company’s results over the last four quarters, they did not, in general, meet the investors’ expectations, and they did not meet our internal expectations,” said Thomas Siebel, company founder and chairman of the board, in a press conference Wednesday.

“The board did a very thorough review of all operations in the business and performance of the business and thought it was in the best interests of the shareholders and the best interests of the company to make the change.”

The news comes shortly after the San Mateo, Calif.-based Siebel announced it would not meet earnings expectations, and at a time when it is looking to gain a foothold in the On Demand software market as more CRM software providers shift to delivering software more as a service instead of a major enterprise installation.

Shaheen, who was also the former top executive at Webvan Group, the defunct online grocery service, is also a member of Siebel’s board of directors.

According to officials, Lawrie and the board of directors mutually agreed he would resign the position.

J. Michael Lawrie

Lawrie had been CEO of the popular CRM company for less than a year, taking control of the company’s day-to-day operations in May 2004 after Siebel stepped down from the position. He came to the company after 26 years at IBM, where he served as senior vice president and group executive of sales and distribution before joining Siebel.

Shaheen said the company will focus on long-term customer performance gains to guide the company going into the future, although he wouldn’t have any details to share until after he and his management team had identified the areas to improve operations. He doesn’t expect any temporary disruptions, though change is needed.

“I don’t believe the company today is in alignment on its business and business prospects and the size of our infrastructure costs, and I want to get those into alignment,” Shaheen said. “In the final analysis, this is about operating performance and customer value; that’s what’s going to help Siebel Systems improve its financial performance.”

The lack of details from a board member who’s been in place 10 years drew some sharp questions from investors participating in the conference. One analyst asked why Lawrie resigned less than a year into his term for not meeting goals when Shaheen’s own strategy is predicated on long-term improvements, not short-term gains.

“Everybody can define recovery with a template that they think demonstrates recovery,” Shaheen said. “I think we’ll know that if this company gets turned around, in my vernacular, we can generate performance results that meet your expectations and our commitments over some period of time.”

A long-time software CRM provider, Siebel in the past year has invested heavily in the hosted model that caters to small- to medium-sized businesses (SMB), called CRM OnDemand. In little more than a year the company has updated and enhanced the product seven times as it tries to eat into the market share enjoyed by rival

Siebel’s financial success, in terms of stock value, has dropped since Lawrie took over last May. It went from just above $10 per share to just under $9 per share Wednesday. Earlier this month, a group of investors scheduled an open meeting for today to discuss the company’s operations following a disappointing first quarter 2005.

Investment firms Wachovia, Jefferies & Co. and Needham & Co. downgraded the company after the preliminary first-quarter results were announced.

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