So what is Siebel CRM OnDemand all about?

Siebel announced Siebel CRM OnDemand, a hosted model that extends its current offering and at the same time increases its appeal to new customers.

The big news at this year's Siebel User Week was Siebel CRM OnDemand, the much-anticipated hosted version of the

market's leading product. It may seem unlikely that the new product was big news, given that rumors of the company's plans for hosted CRM started circulating in July. But the customer reaction to Siebel CRM OnDemand seemed noteworthy.

Salesforce.com took the news seriously. They donned T-shirts bearing the slogan "free software," lined the road outside the San Diego Convention Center, and gave out Krispy Kreme doughnuts and coffee. It's rumored that Salesforce.com plans to file papers in a few weeks with the Securities and Exchange Commission in preparation for a public offering, and the release of CRM OnDemand is expected to hurt the company's offering price. Tom Siebel seemed more bemused than annoyed with the demonstration, and he even stopped for a doughnut on his way to the convention. Siebel customers were less forgiving, and some expressed how unprofessional they found the exercise in humor and self expression.

So, if Salesforce.com's purpose in organizing a demonstration was to get attention, it worked. If the purpose was to persuade existing Siebel customers to switch to Salesforce.com, it proved to be merely a distraction.

It has been said that Siebel is late to the hosting game, but in business, it is often better to be late than early. That way you can learn from the mistakes of the pioneers. Everyone remembers that Apple sold personal computers before IBM, but how many remember that Royal Crown sold decaffeinated cola before Coca-Cola, or that De Havilland Aircraft sold personal passenger jets before Boeing?

At the conference, Siebel unveiled a pricing model for CRM OnDemand. For as little as $70 per month per user, organizations (or even individuals) can sign up for the service. "Little" is, of course, a relative term. Over time, even a modest amount adds up. Over a five-year period, a company with a 500-person strong call center would end up paying $2.1 million for Siebel CRM OnDemand.

The way Siebel has improved on the current industry model is by offering both hosted and premise products on the same data schema. A company can start out using the hosted system, then switch to an on-site system as soon as it becomes financially attractive. A company could trade its premise system for Siebel CRM OnDemand, or do some combination of hosted and on-site software.

Siebel is not dogmatic about how subscription pricing should be done. The company promises to sell multi-year, multi-site plans one time, quarterly or annually, depending on the customer's needs and wants.

Siebel also improves on the current model by leveraging the fact that it offers the most functionally rich applications on the market. CRM OnDemand includes built-in analytics that identify a variety of things, including data about why deals are won or lost, who the most profitable customers are, and projected versus historical revenue. The analytic capabilities extend to create interactive charts, pivot tables and reports. CRM OnDemand also supports multiple currencies and languages, including English, German, French, Spanish, Italian, Japanese and Chinese.

Another improvement was the decision to host the solution in conjunction with Big Blue. As an old industry truism goes, "No one ever got fired for choosing IBM." Although this isn't 100% accurate, using IBM as host should create greater peace of mind among members of management -- who may be concerned about whether their data will be secure and whether support will be strong when the time comes to make a purchase decision.

So the real news at Siebel's User Week was the unexpected reaction among customers that they would consider using Siebel CRM OnDemand in places they would never use a non-compatible hosted solution. Those who seemed to find the offering most compelling include customers with small divisions, customers with remote offices in locations with limited IT support, and customers with large networks of captive and non-captive dealers.

By listening to customers, rather than cannibalizing its current offering, Siebel seems to have found a way to offer a hosted model that extends its current offering and at the same time increases its appeal to new customers. Isn't that what CRM is all about?

This was first published in October 2003

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