Host with the Most (Part 3): Siebel

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It’s taken a few years, but with the evangelical fervour of the born-again, Siebel has embraced the concept of hosted applications to its corporate heart over the past two months. After shutting down its sales.com operation a few years ago, the CRM market leader has signed up for CRM OnDemand with IBM Global Services as well as buying up a hosting vendor in the shape of UpShot.

But is Siebel coming back into this market sector because it genuinely believes in the concept of hosted applications? Or is it an expedient move driven by the twin demands of slumping licence revenues and increased competitive pressure from arch rival salesforce.com’s current high profile?

Advocates of the latter - which inevitably include both salesforce.com and Oracle - argue that Siebel’s approach is confusing. Why sign a deal with IBM then go out and purchase UpShot three weeks later? Surely that’s a clear sign of a strategy that’s being made up as it goes along?

Not at all, insists Neil Morgan, European marketing director for Siebel. "We’ve been working on this for over a year," he says. "Look at the elapsed time between when we announced the IBM deal and when we announced buying UpShot. You don’t buy a company like UpShot in three weeks. I’m not personally sure of when we began talking to UpShot, but I do know that the overall strategy has been underway for over a year.

"The reason we bought UpShot is to acquire the experience of the hundred or so people who work there. It’s the same thing that we did when acquired Scopus. We are buying in expertise to build and enhance our own products. The UpShot product set has a number of elements that are not included in the first release of OnDemand version one. We will take those, but the real gain is the experience."

Salesforce.com CEO Marc Benioff has highlighted an apparent confusion in as much as the Siebel OnDemand products is Websphere and IBM centric, whereas UpShot’s product is a purely Microsoft piece of software. Morgan makes no attempt to deny this, indeed cannot see the problem here. "OnDemand is J2EE, whereas UpShot is .Net," he says. "We have no plans in the public domain to provide a .Net hosted product. We’ve not said that we do. Again, any talk to OnDemand being delivered on Sun or HP platforms is purely speculation as well. OnDemand is IBM WebSphere based."

Nonetheless, it does seem to the outside observer that this is a second stab at cracking that hosted market following the demise of sales.com. "Sales.com was really more of a portal for sales people, not a CRM application" argues Morgan. "What we are doing now is web basing our Siebel 7 architecture and make a complete CRM suite available as web applications."

Morgan also sees a complementary market for hosted CRM alongside traditional licence based delivery of software, even within the same company. "Siebel has been expensive to buy and deploy in the past," he says. "There are those customers that have people who use CRM applications all the time, such as those who work in call centres. But there are other people in the organisation for whom access to the same information would be nice for a few hours a day. I can see that we can have a hybrid revenue model from companies that have got Siebel in house already, have the data model in place, but want different ways of delivering it."

"Every market has its lifecycle,"predicts Morgan. "We’ve seen the first cycle of hosted applications vendors. We’ve seen the NetSuites and the salesforce.coms come along, but they’re mostly niche vendors with questionable long-term viability. We’re now at the start of the second phase. One of the commentators has used the term legitimisation. I think our entry is bringing about the legitimisation of OnDemand. The only company that’s been talking about OnDemand to date has been IBM, who we’re now working with. A new wave usually brings new names, but I think this new wave will bring new options instead with a lot of the same names bringing new models."

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