AMS-Siebel Pact Gets Thumbs Up

AMS-Siebel Pact Gets Thumbs Up

Leif Ulstrup

By Nick Wakeman, Staff Writer

American Management Systems Inc. and Siebel Systems Inc. are joining forces to invade the growing government market to build systems that deliver services to citizens electronically.

The alliance between AMS of Fairfax, Va., and Siebel of San Mateo, Calif., pushes AMS ahead of many of its systems integrator competitors in the government market for customer relationship management systems, according to analysts.

"A lot of systems integrators are talking about it, but AMS is the first to put anything on the table," said Ray Bjorklund, senior principal consultant for Federal Sources Inc., a market research firm in McLean, Va.

AMS' alliance with Siebel is a coup because the latter is a recognized leader in developing the software that allows organizations to collect and use data about customers online and through call centers, said Brace Brooks, an analyst with the investment firm Johnston, Lemon & Co. of Washington.

Customer relationship management (CRM) business could account for more than 5 percent of AMS' government business within two years, said Leif Ulstrup, vice president of public sector CRM at the company.

The systems integration and consulting company gets about $500 million of its more than $1 billion in annual revenue from federal, state and local governments. AMS stock closed at $30.75 Jan. 31. The stock price has ranged from $38 to $19.75 over the past 12 months.

The company's alliance with Siebel, announced Jan. 24, comes on the heels of AMS' December partnership with Ariba Inc., a Mountain View, Calif., electronic commerce software developer. The two companies will be collaborating on electronic procurement systems for the government.

"AMS is getting in on some high growth markets. They are right on the cutting edge," Brooks said.

Siebel, which had $791 million in 1999 revenue, does little government work currently, said Kevin Fitzgerald, Siebel's vice president of public sector. Siebel's stock closed at $91.69 Jan. 31. The stock price has ranged from $15.75 to $97.50 in the past 12 months.

"We are just beginning to invest in the public-sector market," he said. "We think the time is right for the technology we have been using in the private sector."

Siebel will be providing AMS the software and expertise to build Web-enabled information systems and call centers that citizens and businesses will use to interact with the government. The two companies will collaborate on product development, engineering, marketing, sales and support.

AMS will train 1,000 consultants and sales people on Siebel products. Siebel also will train its sales force on AMS offerings.

While not an exclusive agreement, the partnership with AMS is the cornerstone of Siebel's thrust into the public sector, Fitzgerald said.

Siebel has global partnerships with companies such as Unisys Corp. of Blue Bell, Pa., and IBM Corp. of Armonk, N.Y., that do substantial government work.

But they are not the experts in customer-relationship management like AMS, Fitzgerald said.

Ulstrup said about a third, or $60 million, of AMS' business with the financial services industry comes from building CRM systems.

AMS wants to leverage its expertise in that commercial market to the government sector, he said.

"The private sector has really been setting the bar in customer service," Ulstrup said. "The citizens' expectations have been going up in terms of the level of service they want."

While winning and retaining customers is the motivation for CRM systems in the private sector, the federal government is looking at it as a way to save money and streamline processes, Ulstrup said.

"We think now that we are post-Y2K, a lot of business functions are going to get pushed out to the Web," he said.

AMS and Siebel will be targeting a broad range of agencies including those in the Defense Department and state and local governments, Ulstrup said.

"We are going to be looking at organizations that see serving customers as their key priority," he said.

Those customers can be citizens looking to file taxes, check on benefits, or apply for grants and loans. The customer also can be businesses that are regulated by the government, do business with the government or must file reports to the government, Ulstrup said.

A classic example is a farmer who has to deal with several different agencies at the Department of Agriculture, Bjorklund said. The farmer also has to provide information to other agencies such as the Internal Revenue Service and the Social Security Administration.

A CRM system would consolidate the information the government collects so that when the farmer calls or contacts the Web through the Web, all of his information is in one place and the farmer can be served more quickly and efficiently, Bjorklund said.

How much the government will spend to build these systems has not been estimated yet, Bjorklund said.

"The government can recognize an opportunity to gain a lot of efficiency by sharing its information [among the agencies]," he said.

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