Siebel Sees The Light In Hosted CRM

Tom Siebel, head of CRM vendor Siebel Systems Inc., on Tuesday officially introduced the company's newest effort as an online hosted customer-relationship-management product/service, called Siebel CRM OnDemand. Affirming the company's seriousness about the hosted CRM market, as exemplified by its extensive partnership with IBM in support of the product, Siebel predicted during his first keynote speech at Comdex in Las Vegas that the company's marketing campaign for CRM OnDemand next year will be "perhaps the largest in the IT industry in 2004, perhaps the largest ever."

Siebel CRM OnDemand will be generally available next month. It's an optimized version of the company's flagship CRM product that can be accessed through a Web browser over the Internet from geographically dispersed servers. Those servers can be running in a company's internal IT infrastructure or can be hosted by IBM in one of its global hosting centers. The product is expected to appeal to both small and midsize businesses, as well as departments of larger companies. One big reason: cost. Reflecting a trend in the software industry toward subscription pricing, Siebel CRM OnDemand has a flat fee of $70 per user per month.

In his speech at Comdex, the born-again business-to-business trade show, Siebel made no mention of what may have been a prime motivator for developing the hosted product--the success of archrival Salesforce.com Inc., which offers only an online hosted version of its CRM suite. Siebel has tried twice before to generate a successful hosted-app strategy: two years ago, in an aborted effort after acquiring Sales.com and working with Web hoster USinternetworking Inc., and then again with its recent purchase of UpShot Corp., a hosted CRM vendor. Siebel says it will support the UpShot service for as long as users want it, but the technology will eventually be merged with Siebel CRM OnDemand.

Tom Siebel says about 2 million people use the company's flagship product, but market analysts figure there's a market of about 107 million more potential CRM users who don't have any kind of customer-support technology. In the future, Siebel says, a hosted CRM system could appeal to as many as 70% of that potential customer base. He wouldn't comment on what percentage of the company's revenue he sees CRM OnDemand generating, but at least for the short term, "the focus is on gaining market share, not revenue."