The partnership, which is aimed at enterprise customers, was endorsed by Microsoft chairman Bill Gates, at Siebel's annual user conference in Los Angeles. "Microsoft and Siebel Systems share a common vision for how enterprise applications should evolve to meet the demands of the marketplace," he said.
Customer relationship software supplied by Siebel will be the first to be certified to run on .net, a business model based on selling software as a service.
Both companies are backing the XML-based Web services model to simplify and speed integration with Siebel optimising its e-business applications for Microsoft's .net platform.
Neil Morgan, VP marketing EMEA, Siebel, said the partnership "will be based on open standards for Web services and won't lock customers in, driving down the cost and complexity of business integration."
The partnership has three main elements. In terms of products Microsoft will support Siebel's Universal Application Network (UAN). This will mean eventually that Siebel Integration Business Processes can be implemented and executed on UAN using Microsoft's BizTalk Server and Visual Studio tools.
On the client side, Siebel eBusiness Applications will use Microsoft .net technologies to provide what it sees as tighter integration with Microsoft Office as well as support for emerging mobile devices.
The third plank of the relationship will see Siebel eBusiness Applications optimised for Windows Server operating systems, Microsoft SQL Server and the Microsoft .net framework.
The partnership is likely to involve a major rework of the Siebel packages according to one industry expert. David Bradshaw, Ovum lead analyst CRM, warned: "Re-developing something as big as Siebel to .net is a massive undertaking. It will take years for the fruits to come through for a .net version of Siebel."