Siebel sets aggressive targets for hosted CRM

Siebel Systems has returned to the hosted CRM market and has predicted it will surpass the market leader Salesforce.com.

Siebel Systems has returned to the CRM market and has predicted it will surpass the market leader Salesforce.com.

"It's highly likely that next year we will be the world's leading provider of hosted CRM," Tom Siebel told reporters at Comdex.

Salesforce.com established an early lead in hosted CRM and said it has about 8,000 customers, for a total of almost 120,000 seats deployed.

By contrast, Siebel's CRM OnDemand offering does not launch until next month. Several customers are live on the system as part of Siebel's beta program, but how many seats are involved was not diclosed.

Siebel has about 4,500 customers for its software altogether, mostly large enterprises, and its applications are deployed on about two million seats.

The goal of surpassing Salesforce.com will be a tough one, said Joshua Greenbaum, principal analyst with Enterprise Applications Consulting.

The issue is whether Siebel can build up its hosted business without cannibalising the software sales that provide its core revenue, he said.

Customers may look at Siebel's hosted offerings and ask, "Why am I paying this maintenance fee on these big applications when I can just go on-demand?," Greenbaum said.

Siebel ran into that problem a few years ago with its first effort to offer hosted applications. It pulled the plug on its Sales.com business in 2001, because it was taking too many customers away from its core software business. This time it faces the additional challenge of being up against an established competitor.

Sales.com was ahead of its time, argued Tom Siebel, adding that customers are now ready to outsource management of their applications.

The company also has the backing of IBM, which will be a close marketing and development partner.

James Niccolai writes for IDG News Service

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