OnDemand, On the Move?

In a terse, one-sentence press release, Siebel Systems today confirmed it has closed 175 new transactions for its hosted product, CRM OnDemand, since the start of Q2 2004 and that the number includes 62 new OnDemand customers.

Siebel and IBM first announced the hosted CRM cooperative product, which the two companies jointly developed, distribute and service, last October. OnDemand specifically targets the growing market for easy-to-install and affordable CRM systems while providing about 40 percent of Siebel’s on-premises CRM functionality.

Okay Numbers

Denis Pombriant, managing principal at Beagle Research, told CRM Buyer that he thinks the numbers sound okay for a new market entrant. However, he added, he is more interested in seeing year-to-year comparisons a year from now.

When CRM Buyer asked for more details about the brief statement, Siebel spokesperson Steve Diamond said he could not say more than was in the release and that because of the Memorial Day weekend it would be difficult to find anyone who could answer questions regarding the statement. IBM contacts for OnDemand also were not immediately available for comment.

Marketing Muscle Pays Off

Yankee Group program manager Sheryl Kingstone told CRM Buyer in an interview that, considering the marketing muscle the companies are putting behind OnDemand, she expected to see this level of momentum. However, she noted that she wants to know more about the customer base: “What type of customers are they? How are they using it? What’s their experience like? Are they testing it or committed to it?”

The OnDemand.com site lists a spectrum of customer companies in diverse industries around the world, including AMS, a supplier of electronic component kits and solutions for printed circuit-board assembly; ATB Financial, a US$13.8 billion, full-service financial institution based in Edmonton, Alberta, Canada; eTelecare International, a global call-center provider and the leading call center in the Philippines; Kehoe Tile & Stone, a tile, stone and slab subcontractor serving residential and commercial markets; and Neon Enterprise Software (NESI), a leading developer of software products for efficient management of enterprise data.

After Failure, Joint Development

Siebel launched its first entry into the hosted space in 1999. Its Sales.com service failed quietly, but the company apparently still believed in the approach. Rumors spread of a Siebel-and-IBM joint offering. While other companies capitalized on the opportunity in the hosted CRM space, the two giants worked together and then launched CRM OnDemand last October, hoping their name and expertise would create demand.

For the joint solution, Siebel provided functionality based on its CRM model and handled customer support and billing issues. IBM built the hosting infrastructure using its WebSphere J2EE application server.

Both companies tout the OnDemand product as an offering that is easy to use and configure as a Web site. Hosting is a good way to remove some complexity so that users with limited resources — as many late adopters are — can get the benefits of CRM, Pombriant said.

The product allows customers to start a small CRM project with minimal start-up time, deploy it quickly and grow their CRM system as requirements evolve, according to Siebel and IBM. It supports individuals and companies that want to manage contacts, sales opportunities, products, prices, competitors, events, marketing campaigns and customer-service requests.

New Editions Coming

Earlier this month, Siebel announced CRM OnDemand Industry Editions, offering them at $100 per user per month. Customers signing a one-year agreement receive an introductory price of $70 per user per month.

Siebel says the Industry Editions provide out-of-the-box capabilities that meet the specialized needs of eight different industries, enabling companies to address sales, service and marketing challenges unique to their industry. Siebel plans to make editions for the insurance, high-technology, automotive and communications and media industries available this summer. Editions for financial services, life sciences, manufacturing and consumer goods will follow in the winter.

Too Many Messages

Beagle Research’s Pombriant said that by introducing a hybrid solution, in which companies effectively build their own hosted infrastructures around a core Siebel implementation, Siebel has defined a new space.

“It might be a hybrid solution, but it is an effective method of providing the right amount of CRM functionality where it is needed, when it is needed,” he said. “I see this hybrid providing an important part of enterprise infrastructure that should be appealing to many companies.”

Pombriant added, however, that with one message designed to promote hosting only, another for on-premises only, and a third for hybrid, Siebel might have too many. Perhaps Burger King’s “have it your way” combined with “tell us how we can help” can tie together these various corporate messages, he mused.

“Sure, the numbers are nice, but salesforce.com has thousands,” the Yankee Group’s Kingstone said. “I want to know how OnDemand customers are reacting. How they feel about it is the real bottom line for me.”

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