IBM, Siebel to extend customer service ties

The two companies are expected to announce an expanded partnership that would fortify the customer relationship management company's position against Oracle.

Kim Girard

Kim Girard has written about business and technology for more than a decade, as an editor at CNET News.com, senior writer at Business 2.0 magazine and online writer at Red Herring. As a freelancer, she's written for publications including Fast Company, CIO and Berkeley's Haas School of Business. She also assisted Business Week's Peter Burrows with his 2003 book Backfire, which covered the travails of controversial Hewlett-Packard CEO Carly Fiorina. An avid cook, she's blogged about the joy of cheap wine and thinks about food most days in ways some find obsessive.

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Kim Girard

Jan. 2, 2002 4:43 p.m. PT

3 min read

IBM and customer service software leader Siebel Systems are about to get closer.

At a joint conference scheduled in New York tomorrow, the two companies are expected to announce an expanded partnership that would fortify the customer relationship management (CRM) company's position against Oracle, according to industry analysts. Senior IBM sales executives and Siebel CEO Tom Siebel are to attend.

"I think they [Siebel] are looking for ways to deepen and extend the relationship," Hambrecht & Quist analyst James Pickrel said. "Siebel has been using IBM as a bit of a foil or counter measure to the Oracle pending entry into the CRM market."

For IBM, tomorrow's announcement follows the company's quiet scuttle of its own customer service software division, called Corepoint Technologies. Corepoint had launched in August 1998 after Big Blue acquired Software Artistry and folded it into a separate arm of IBM that sold and supported sales, telephony, and call center software.

IBM and Siebel are already working together in dealing with certain customers. The companies forged an agreement in April to deliver "out-of-box" integration between IBM's DB2 database and Siebel's applications, a move intended to lure Siebel's customers away from archrival Oracle's database. In August, IBM Global Services said it would deliver support services for Siebel products.

The CRM software market is one of the industry's hottest right now--expected to reach $16.8 billion by 2003, with an annual growth rate of about 50 percent over the next five years, according to AMR Research. Made by Siebel Systems, Clarify, Vantive, Oracle and others--CRM helps businesses manage complex sales, marketing, customer service, and call center functions.

Over the past several weeks, CRM deals have loomed large, including networking giant Nortel's $2.1 billion purchase of CRM software maker Clarify and the $433 million PeopleSoft-Vantive merger.

Analysts said IBM, which has retained pieces of Corepoint's offerings, is smarter to cultivate its relationships with top-tier CRM companies, including Siebel, Clarify, and Vantive, while relying on its IBM Global Services arm to do the legwork in CRM agreements.

Noting that Software Artistry wasn't a top-tier CRM maker, Robert Mirani, analyst at the Boston, Massachusetts-based Yankee Group, said "They marketed the heck out of it [Corepoint]" without much success. "They threw a lot of money at something that didn't work out. Corepoint is definitely dead."

Siebel's strategy appears to be more of the same. "Siebel is trying to bolster itself against Oracle," International Data Corporation analyst Judy Hodges.

Although Hodges did not comment on tomorrow's announcement, she said she wouldn't be surprised if the companies agreed to develop a hosting service for customers that pairs IBM's database and servers with Siebel's CRM applications. IBM could logically expand that hosting relationship to include J.D. Edwards software, she said. The latter is currently working as a Siebel partner on a plan to ease integration between J.D. Edwards financial applications and Siebel's sales and customer support software.

Oracle cozy with HP
Although Oracle has completed many IBM-based CRM projects for customers, the company has lately been cozier with rival Hewlett-Packard. Last month, HP said it would use and help sell Oracle Sales, which is part of Oracle's CRM software suite. Both companies also agreed to link their customer sales and lead-tracking systems to better target joint sales opportunities, as well as integrate HP's hardware to work with Oracle's software sold on HP systems.

Oracle is due to ship a full suite of Web-enabled CRM software with its 11i release, expected during the first half of next year, at which time the company's threat against Siebel is expected to escalate.

Oracle executives have said they plan to surpass Siebel's CRM revenues by next year, although analysts say the goal is ambitious.

"11i will have a lot of CRM functionality," Mirani said. "[Oracle has] CRM software now but it's not something we would recommend to most users unless they're already an Oracle shop."