Mounting pressure from pissed-off shareholders has forced Siebel Systems, the once-high-flying purveyor of software for managing customer data, to bring in its second CEO in less than a year. The new guy, George Shaheen, may not be exactly what investors had in mind. In his last gig, he oversaw the spectacular flameout of dot-bomb Webvan. Then again, one of shareholders’ biggest gripes is that the company has done nothing with its $2 billion cash hoard even as its business has faltered. If nothing else, Shaheen certainly learned how to burn through cash at Webvan.

But whatever Siebel’s particular fate, its travails provide a fascinating look at the current state of the business-software industry. The easy money has already been made from selling complex software packages that automate commonplace business processes, like financial reporting, purchasing, and Siebel’s specialty, customer relationship management (“CRM”). As the market matures, it’s been assumed that the leading software houses would consolidate in order to protect their profit margins and continue their growth. And that’s happening. One reason Siebel’s in trouble is that bigger rivals, mainly the enterprise-software behemoth SAP, are eating into its market from above. But that’s not the whole story. Siebel is waging a two-front battle. It’s also under attack from below, with smaller companies like RightNow and Salesforce.com offering companies cheaper, simpler options for tracking customer information. These “hosted software” firms enable companies to tap into sophisticated programs over the Internet – to rent the software rather than buy and maintain it themselves.

So even as the traditional enterprise-software market consolidates, it’s also undergoing a transformation, shifting from a software-as-product to a software-as-service model. These two trends will continue to produce crosscurrents for many years. Though the overall market is maturing, smart entrepreneurs still have plenty of opportunities in business software.