Siebel tells users total cost of ownership is the issue

"Enterprise software must embrace the speed of change in business," he said during a keynote speech opening the company's annual customer conference in San Diego.

"In this new era of CRM, we see hybrid solutions to meet the requirements of distributed business models."

Siebel's focus remains reducing ownership costs and increasing return on investment for its customers, according to Siebel, who told his engineers to spend this year focusing on lowering costs rather than expanding functionality.

Last year, Siebel promised customers to halve the total cost of ownership. Siebel admitted that his company has not quite hit that target,  "but we did come really close".

Siebel's next major upgrade, version 7.7, is now functionally complete and on track for release in the first half of 2004, he said. A complete overhaul of Siebel's CRM system remains many years away. Siebel predicted that his company could stick with its version 7 system to the end of the decade.

"This is not something that's going to be replaced next year with a version 8," he said. "We see this as a product architecture with legs."

Analyst group Gartner said small and medium-sized businesses would be interested in Siebel's on-demand product. "Siebel's large customers should re-examine the feasibility of extending Siebel to parts of the organisation previously left out for budgetary reasons," a briefing note recommended.

Siebel also used his keynote address to highlight the company's Universal Application Network (UAN) initiative, a portfolio of packaged integration applications intended to help customers implement business processes across heterogeneous software applications. The integration market is "like gold", Siebel said.

The company announced the release of more than a dozen new UAN integration processes, and highlighted its continuing work with partners including Microsoft and IBM to keep UAN integrated with the latest technologies.

Stacy Cowley writes for IDG News Service