Moving further away from the practice of using proprietary application server software to power its CRM products,
Siebel Systems Inc. this week expanded its relationship with IBM Corp.
Under the deal, which was announced Tuesday, San Mateo, Calif.-based Siebel will build software tailored to run on IBM's Java-based WebSphere applications server platform. Siebel reported it would deliver WebSphere-oriented CRM software products in the next 12 to 24 months. The first applications will be industry-specific products, including a tool designed for the retail/finance industry.
According to Jeff Scheel, general manager of Siebel Alliances, the CRM vendor is undertaking its efforts around industry standards such as Java and .NET because of the advancements made by developers, including those at IBM and Microsoft Corp.
"This has a similar feel to our decision in the early '90s around supporting multiple database platforms," Scheel said. "Customers are constantly asking us to move away from proprietary architecture."
This is not Siebel's first step away from its proprietary strategy. Last October, it inked a similar partnership with Redmond, Wash.-based Microsoft involving the software giant's .NET platform.
Siebel competitors, including SAP, have made similar moves. The company, based in Walldorf, Germany, recently announced its NetWeaver product, which also will enable customers to use the development tools from IBM and Microsoft.
Siebel already has a long-running relationship with IBM. The companies estimate that they currently share more than 1,000 enterprise customers. Scheel said the two companies would invest approximately $300 million into the partnership during the next three years.
According to Erin Kinikin, research leader at Giga Information Group, Santa Clara, Calif., the IBM partnership should serve as a positive for CRM users. The analyst said it may be hard for Siebel to "serve two masters" in the form of both IBM and Microsoft, but Kinikin believes it was a move the CRM vendor had to make.
"Customers are going to demand that applications are built around open standards like Java in the future, so you could call this a preemptive move by Siebel," she said.
However, Kinikin is concerned that it could take two years for Siebel to deliver WebSphere-enabled products, and she added that customers may feel their existing implementations will be rendered somewhat obsolete when the new applications arrive. She also warned that working with both IBM and Microsoft would take significant effort.
"It's hard to dance with two elephants at once," Kinikin said.
Denis Pombriant, managing director at Aberdeen Group, Boston, said the move toward open architectures is a necessary step that every enterprise software maker will likely need to take.
"Even when Siebel pledged its allegiance to .NET, it was careful not to de-emphasize Java," Pombriant said. "I would have been surprised if they hadn't done this next."
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