Siebel, IBM To Spend Millions On Joint CRM Offering

Siebel Systems announced Thursday that it has jointly developed with IBM a hosted version of its CRM software, called Siebel CRM OnDemand.

The service, priced at $70 per user, is aimed at both SMB customers and large customers wanting to connect to branch offices and independent suppliers.

Executives at the two companies said they've agreed to spend "tens of millions" of dollars to jointly market the service, which will be sold by IBM's SMB sales force, Siebel's direct-sales organization and a joint IBM-Siebel telemarketing group. The service is being hosted from IBM's data center in Boulder, Colo., but no mention was made of the channel's place in this grand scheme.

Some CRM solution providers don't seem troubled by the omission. "[This kind of service] helps us improve our offerings to clients because we can move quickly beyond the technical hassles of the implementation and focus instead on helping customers improve their business processes and managing their businesses," said Fred Reede, principal at CRM Solutions, a solution provider based in Canton, Ohio.

The new service,which CRN reported on last July, is clearly a shot across the bow of hosted CRM providers such as Upshot and Salesforce.com. It also tacitly acknowledges the new financial reality of dramatically reduced revenue from CRM software licenses. Siebel's financial reports show that license revenue for the first half of this year was down 47 percent from the same period a year earlier.

"We've been beating traditional CRM vendors on the road, and we expect to continue," said Keith Raffel, chairman and founder of Upshot. "Microsoft tried to introduce a similar solution last January, and our sales accelerated after that. We expect another push from the Siebel announcement."

According to Siebel Executive Vice President David Schmaier, the hosted service is not a rewritten version of Siebel's executive software. Instead Siebel CRM OnDemand, built on the Siebel business logic and data model, was written from scratch by developers at Siebel, IBM Global Services and the IBM WebSphere engineering team specifically for the Internet. That shared business logic and data model means that customers can integrate on-premise and on-demand information easily and migrate from the hosted service to Siebel's more traditional software.