Two years after Siebel Systems shut down Sales.com, the
company appears to be once again considering a move into the hosted
CRM market with longtime partner IBM.
While nothing has been officially announced, analysts and
competitors are already responding to rumours and press reports
that Siebel is considering offering its applications online on a
subscription basis, with IBM's Global Services unit handling
hosting duties.
The momentum of business software ASPs like Salesforce.com has
been too strong for traditional suppliers to ignore, according to
Aberdeen Group analyst Denis Pombriant.
"Salesforce.com showed the way. They've had a lot of publicity
over the past year, and there's no longer any hiding. The
technology works, and the market demand for this style of solution
is growing," Pombriant said.
Officials at IBM and Siebel declined to comment on whether a
specific deal is in the works and said that as part of their
ongoing partnership, the two companies talked frequently about
potential new services and alliances.
Analysts said a hosted CRM offering would make strategic sense
for both companies.
Siebel has posted a string of disappointing quarters as it
struggles to find buyers for its business applications in a tight
spending environment for enterprise software.
Most buyers for hosted CRM products are small and midsized
companies, which have been spending more freely during the downturn
than have their larger counterparts. A software-as-service offering
could help Siebel penetrate that market and expand its customer
base.
IBM, meanwhile, has made increasing its sales to SMBs (small and
medium-sized businesses) a company-wide priority. It began
constructing last year a network of ISVs (independent software
vendors) to offer their wares as IBM-hosted applications, available
to customers for a per-user monthly fee.
Tier 1 Research analyst Andrew Schroepfer thinks that the IBM
network could eventually threaten the business of
conventional suppliers such as PeopleSoft, SAP and Siebel, unless
they can find a way to take advantage of the growing interest in
hosted application services.
"Siebel is largely considered the best-of-breed, but they have
no market opportunities because their systems are so expensive and
have so many features. Going on IBM's platform would be a way for
Siebel to penetrate the midmarket," he said.
Siebel's Sales.com online CRM venture lasted two years but never
generated the demand Siebel hoped for. Launched in a time of
dot-com enthusiasm, the initiative wilted once the economic mania
subsided.
Aberdeen's Pombriant said Siebel is now better positioned to
offer on-demand CRM than it was in the Sales.com days.
"Siebel, like a lot of suppliers, has, over the past few years,
been through a process where they've re-architected their
applications. Their applications today are much more lean, much
more web-oriented - they are at home in a browser. All those things
were missing in Sales.com," he said.
Dedicated CRM ASPs are, unsurprisingly, sceptical about the
prospect of Siebel entering their market.
"With the architecture that Siebel has, I think it's going to be
particularly clumsy and cumbersome," said Salesnet chief executive
officer Mike Doyle.
Several enterprise applications suppliers, including PeopleSoft
and Oracle, offer hosted versions of their software.
Salesnet does not usually run into those companies in pitching
new business. Though his company competes with both traditional and
hosted applications suppliers, its main competition remains other
dedicated ASPs, including Salesforce and UpShot, he said.
Whether or not Siebel joins with IBM, the company is at some
point soon going to have to address the growing customer interest
in hosted applications, Pombriant said. He sees the ASP model as a
development that is fundamentally altering the business software
market.
"I think hosting might be one of those technologies that you see
periodically that drives the industry out of recession," he said.
"It appears that the interest in hosting just keeps
accelerating."
Stacy Cowley writes for IDG News Service