Siebel Systems has prepared to move into the hosted applications market in partnership with IBM.
The two companies have sealed a deal to begin offering a $70 per-user, per-month service, making Siebel the first enterprise CRM supplier to bring out a subscription product to compete head-to-head against the growing ranks of CRM ASPs.
Siebel CRM OnDemand is scheduled for fourth-quarter launch.
Customisation is designed to be handled in-house by customers, with no consultants needed and no added installation expenses.
The $70 per-user monthly subscription will be the software's only cost, according Richard Gorman, Siebel's senior vice-president of products. Siebel and IBM will jointly market the service though their sales forces and through a $15m publicity campaign.
Small and midsized businesses are the main intended audience for the service, but Siebel also hopes to entice larger businesses to use it for expanding CRM deployments.
Ten potential buyers are now testing the product, Gorman said. He anticipated the average deal size will be for 20 to 35 users and there are no limits on the number of licences companies can purchase.
While Siebel CRM OnDemand has a custom architecture and user interface, it will integrate with, and offer upgradability to Siebel's traditional software.
Siebel was an early competitor in the CRM-as-a-service market, launching Sales.com in 1999 to offer browser-based sales tools. Two unprofitable years later, the venture was scrapped.
Since then, however, a pack of independent suppliers has carved out a midmarket niche, offering smaller organisations - and even departments at larger ones - access to some of the functionality traditionally found in large, complex business applications, without the implementation hassles and high price tags associated with those packages.
The partnership with IBM will also help Siebel attract customers that have steered clear of other hosted CRM supplier, Meta Group analyst Liz Roche said.
Beyond pressuring the CRM ASPs, the Siebel/IBM service increases the competitive heat on Siebel's traditional rivals, including PeopleSoft, Oracle and SAP.
All of the top CRM and ERP suppliers offer hosted versions of their software, but none has made an attempt to break the price barrier and offer inexpensive subscription services, said Amy Wohl, of Wohl Associates.
Stacy Cowley writes IDG News Service