Siebel touts online wares at Comdex

LAS VEGAS--Reflecting the Comdex trade show's emphasis on corporate computing, Siebel Systems Chief Executive Tom Siebel took the stage Tuesday to tout his company's server software and online services.

Siebel sells customer relationship management (CRM) software that is used for corporate tasks such as tracking technical support requests, analyzing sales leads and recording customer purchases. The software typically runs on a company's server, but in an hour-long demonstration, Siebel also touted an online version called CRM OnDemand that is sold through a partnership with IBM.

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Siebel said his company will promote its CRM OnDemand service heavily in 2004, including a multimillion-dollar advertising campaign.

"We'll develop a very large-scale, go-to-market effort in 2004, perhaps one of the most significant efforts in 2004," Siebel said.

Companies can tap Siebel's CRM OnDemand service over the Internet using a Web browser for $70 per user per month. It competes with services from competitors such as Salesforce.com.

Siebel's service reflects the industry's interest in utility computing, in which customers pay for the computing capacity they need rather than installing all the hardware and software they anticipate needing.

Typically, that means they rely on a business partner to administer hardware and software, paying only to access it.

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That business partner, in turn, can offer the service to several companies so it can benefit from economies of scale.

In his talk, Siebel also said companies must embrace Web services, a suite of Internet communication standards that let businesses tie together computing operations and data. The Web services concept is the latest in a number of profound changes that have swept across the computing in industry recent decades, forcing companies to adapt or expire, Siebel said.

"I think the next major shift we see is to utilize Web services," Siebel said.

To embrace that shift, the company signed development deals to ensure that its software works with the two dominant foundations for Web services: .Net from Microsoft and Java 2 Enterprise Edition, which was created by Sun Microsystems but is now promoted by many companies. Siebel's J2EE partnership, for example, is with IBM.

Web services will glue together disparate CRM applications, such as those between a company and its sales channel partners, Siebel said. This glue becomes more important as companies move operations overseas, expand to overseas markets such as Singapore or China and outsource corporate operations.

Siebel also discussed his company's strategy in expanding to every corner of the CRM market. He said the company won't expand into a new niche until it believes it can attain at least 50 percent market share.

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He later pointed to a series of acquisitions that were required to help the company achieve that goal.

Among the acquisitions that fit this pattern was Paragren in 2000, BoldFish in 2003, OnLink Technologies in 2003 and Motiva in 2003. Siebel also acquired UpShot, which has a similar service to CRM OnDemand that Siebel will eventually assimilate.

During a press conference, Siebel said that the company's goal is to combine the best from CRM OnDemand and UpShot into a new service that will use the OnDemand brand name. The company expects to have it ready by summer 2004.

UpShot customers will be able to use the existing UpShot service as long as they want, but Siebel will offer a free upgrade to the new service, he said.

Achieving dominant market share is crucial in the software industry, he said. In this market, "the leaders will have 50 percent share, the second 15 percent, the third 10 (percent), and the rest fragmentary. When (the market) turns down, it tends to be only the market leader that can generate cash. The others get cleansed out," he said. Consequently, "We are very careful about entering markets."

ZDnet's Dan Farber contributed to this report.