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Siebel OnDemand hosts SMB party

One year after introducing OnDemand, Siebel is targeting SMBs with a new sales force and new vertical products.

One year after Siebel Systems Inc. announced its entry into the hosted CRM market with OnDemand, the application is poised to make strides in the small and mid-sized market, according to Bruce Cleveland, the general manager for Siebel's small business unit.

Actually, the San Mateo, Calif. company doesn't recognize a hosted market but rather small- and medium-sized businesses (SMBs) and enterprise markets. Organizations can elect to deploy either an on-site application or a hosted application, and Siebel is ready to sell either to both, said Cleveland, who is Siebel's former marketing chief and returned to head up the OnDemand and SMB unit.

"[Hosting] has significant traction in the SMB space," he said. "It's not a surprise that would have a lot of growth. There's a lot of pent up demand. Today we're also seeing a lot more of the hosted model in the enterprise space."

Siebel's OnDemand timeline

-- Announces OnDemand


-- Buys hosted provider UpShot


-- Buys hosted telephony firm Ineto


-- Launches OnDemand in Europe


-- Announces first vertical plans

Siebel will not release the number of its OnDemand customers, but that will change next year, Cleveland said. He did offer a rough breakdown of the size of businesses using OnDemand. Customers with annual revenue under $35 million are using the product.

Companies with revenues between $35 million and $500 million split about 70/30 between hosted and on premise with the upper tier companies buying the on-premise version, Cleveland said. In the enterprise market it's the reverse, with roughly 30% hosting and 70% on premise. Siebel inherited roughly 1,000 customers when it purchased hosted CRM provider UpShot in October 2003.

When Siebel first announced plans to provide a hosted CRM application, analysts warned that its sales force, used to selling to enterprise customers, would struggle with the new product. But that should no longer be a concern. The company has recently finished training 70 new salespeople to sell OnDemand in North America and Europe and will announce a value-added reseller program soon, Cleveland said. Additionally, count on Siebel to ramp up its marketing efforts toward the end of the quarter, he said.

It's clear that Siebel is targeting San Francisco's, as it takes on hosted CRM. Initially, Siebel ceded the hosted market to because it didn't have a complete product to compete, Cleveland said. Yet, former CEO Tom Siebel once said hosted CRM was not a viable option for delivering CRM and Siebel's initial foray into online CRM,, was shut down after just two years.

However, that product was never meant to be a full hosted application but was rather a portal with sales methodology content, some opportunity management and some lead downloads from D&B, Cleveland said. OnDemand is a full CRM tool and even though it may not match up with in all areas, it is ahead in functionality like analytics and tracking, he said.

"Salesforce has been running like a football team with no opponent," Cleveland said. "In Q1, we're going to take the field."While has gotten most of the early press around hosted CRM, it is by no means the only vendor. RightNow Technologies Inc., in Bozeman, Mont., which began its CRM initiative on the service and call center side of CRM also went public this year. NetSuite Inc., in San Mateo, Calif., offers hosted ERP in addition to hosted CRM, and Boston-based Salesnet Inc. has positioned itself as a sales-focused hosted application, building out its distribution through OEM agreements. Additionally, many of the on-premise vendors have released a hosted version of their application, which isn't necessarily architected for an on-demand model.

Siebel sets itself apart from these vendors by offering both hosted and on-premise applications together. The "hybrid" model allows a company to use the hosted option in a far-flung office or division and keep the on-premise version in the main office. There are currently no customers that are "truly hybrid" -- companies that have tied together the on-premise and hosted applications through Siebel's Universal Application Network, Cleveland said. That integration was just released this summer.

Meanwhile, Siebel has announced four vertical offerings for the automobile, insurance, high tech, and communications and media industries, which will be generally available next month. Four more verticals are under consideration and will be announced next spring.

While Salesnet also offers vertical applications, Siebel's efforts should help with non-enterprise customers, said Laurie McCabe, vice president of SMB insights and business solutions with Access Markets International Partners Inc. in New York.

"The midmarket is a clear focus for Siebel," McCabe said. "Having the vertical editions helps there."

While has relied on partners for verticalization and given its users the tools to customize the application themselves, Siebel will continue to build out industry-specific functionality on its own.

"As you move into enterprise space, that's not going to fly," Cleveland said. "The products need to be packaged, priced and promoted differently."

Siebel has stuck to a similar schedule of enhancements as, with roughly one per quarter and that will continue, Cleveland said.

Siebel's alliance with IBM is not to be underestimated at its one-year anniversary, according to Denis Pombriant, founder and managing principal with Beagle Research Group in Stoughton, Mass.

"I think they're churning along pretty well right now and pursuing clients aggressively," Pombriant said. "The IBM/Siebel alliance has added the IBM imprimatur into the hosted application and legitimized them in the same way that the IBM PC standardized the PC platform."


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