Bargains for Under $25 HP Envy 34 All-in-One PC Review Best Fitbits T-Mobile Data Breach Settlement ExpressVPN Review Best Buy Anniversary Sale Healthy Meal Delivery Orville 'Out Star Treks' Star Trek
Want CNET to notify you of price drops and the latest stories?
No, thank you

SAP, Siebel rivalry heats up

Shaking up its U.S. organization, SAP will spotlight new customer relationship management products in an effort to surpass Siebel Systems as the largest CRM company.

SAP will spotlight new customer relationship management products at its user conference in June as part of its effort to surpass Siebel Systems as the largest CRM company by next year, an SAP vice president said Wednesday.

The German business-applications company plans to release a new version of its CRM applications in September and redouble its sales efforts in the U.S. market, said Carol Burch, who on Thursday was appointed SAP's senior vice president of global sales operations.

Burch concedes that overtaking Siebel will be tough. Siebel commands nearly 45 percent of the multibillion-dollar CRM market, according to projections from banking group ABN AMRO. SAP is a distant second, with 16 percent of the market.

"We will take the market next year," said Burch, who previously was senior vice president of SAP's global CRM business development. "It becomes a matter of time, but I'm sure it will happen."

Also Thursday, SAP announced a shake-up of its U.S. organization, splitting the region in two and naming an acting chief executive to replace the existing CEO.

SAP named the current chief executive of the Americas region, Wolfgang Kemna, as executive vice president, Global Initiatives--a new division set up to focus on faster-growing customer and supply-chain manufacturing software products. In addition, the company named its head of Europe, the Middle East and Africa (EMEA), Leo Apotheker, as its new head of global sales.

Apotheker, a 14-year SAP veteran, will also become the acting head of SAP's North American operations. SAP also said Les Hayman, president and CEO of the Asia-Pacific region, would become chairman of the EMEA region. Hans-Peter Klaey will assume the role of president of Asia-Pacific.

The shake-up is the second time SAP has reorganized its U.S. operations in the last two years, an effort by the German software company to expand its market share in the region. Kemna had been named CEO of SAP America in April 2000, taking over from then-CEO Kevin McKay, who held the position for just a year.

The rivalry between Siebel and SAP became particularly heated after a Siebel ad campaign in Europe, SAP's home turf, claimed that Siebel is the No. 1 CRM company among SAP customers. SAP took Siebel to court over the ads, and a German court ordered Siebel to stop running them last month.

Burch said that the campaign was wrong because more than 1,500 companies purchased SAP's CRM applications, and that Siebel had no more than 400 customers that are also SAP customers, she believes. Tom Siebel, chief executive of Siebel Systems, maintains that the ads are absolute fact.

The rancor between the companies erupts as overall sales of business applications, including the once high-flying CRM market, are in decline. At the same time, the market is growing more crowded, with Microsoft planning to release a CRM product by the end of the year.

Goldman Sachs cut its earnings forecast Wednesday for Siebel, SAP and 24 other software companies, and predicted that corporate spending on business applications would remain stagnant this year. Shares of both SAP and Siebel fell on the news.

SAP, with over $6 billion in revenue last year, introduced its first set of CRM products only two years ago, and has been playing catch-up to Siebel ever since. SAP's revenue from its CRM products last year totaled $412 million, compared with Siebel's $2.05 billion in revenue last year.

"Siebel is a formidable competitor, and they've owned the market," said Burch. "Certainly they have competition now."

SAP's license revenue from CRM products grew 8 percent year over year in the first quarter of this year. Siebel reported that its first-quarter license revenue declined 27 percent.

Even so, analysts said that it's unlikely SAP will get out ahead of Siebel anytime soon.

"SAP will continue to do very well, gain market share and will have a much higher growth rate, but they are currently one-fourth of Siebel revenue," said Joanie Rufo, an analyst at AMR Research.

To bolster its efforts, SAP is now working to expand the number of CRM sales experts on staff in the United States from 45 to all 275 U.S. sales executives, said Burch.

The United States is the key to SAP's growth in the CRM market, said Burch. Her goal is to grow CRM sales as a percentage of overall license revenue to 20 percent this year, up from 17 percent last year. She expects 60 percent of new CRM license revenues to come from U.S. accounts this year.