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Will hosted predators find any prey? and Salesnet were quick to announce incentive plans to attract UpShot customers. The question is: Will there be any takers?

When Siebel Systems Inc. announced its plan to acquire hosted provider UpShot Corp., it didn't take long for the sharks to start circling.

Within a week, both and Salesnet Inc. announced incentive programs for UpShot's 1,000 customers to migrate to their hosted applications. Whether those programs actually work is a matter of debate.

"It depends what the objective is," said Kelly Ferguson, analyst with Current Analysis in Sterling, Va. "If it's to create flood in the market and act as a marketing ploy, rather than a true attempt to get customers, I think it does [work]. If they get a few customers, I guess you could say it's a success."

Both, San Francisco, and Salesnet, Boston, are offering discounts and free migration programs. (NetSuite Inc., San Mateo, Calif., has not publicized a plan targeting UpShot customers.) Salesnet's program runs through Dec. 15.'s runs through Nov. 30. Given that Siebel just announced the acquisition a week ago -- and it's not expected to be complete until next month -- it appears UpShot users will see little change in the short term. That leaves little reason to switch vendors, other than a general dissatisfaction with UpShot in the first place, Ferguson said.

Besides, she asks, who says the other two application service providers (ASPs) are any safer?

"Salesnet, in particular, could just as easily be an acquisition target, and you could include as well," Ferguson said. "In this time of consolidation, there's no sure bet."

San Mateo, Calif.-headquartered Siebel, which announced its intention not only to enter the hosted market but to become the "market leader," has jumped into the arena in a big way. It unveiled its own hosted offering, Siebel CRM OnDemand, two weeks before it purchased UpShot. It is unlikely the company is too concerned about losing a few of its newly acquired customers to the smaller vendors, but Siebel did issue a press release last Friday "reaffirming" its commitment to support UpShot customers indefinitely. It also promised to blend both offerings into one product in the next year.

Additionally, there is little evidence to show that migration programs have any success in stealing customers. Salesnet offered a similar program when, Siebel's first hosted offering, was shut down. According to Salesnet officials, they did gain customers, but did not keep records of which companies specifically came from that program. said it did not offer a migration program for customers.

The move has, however, given the ASPs more marketing ammunition to launch at the CRM enterprise software leader. It wasn't that long ago that Siebel CEO Tom Siebel pronounced the hosted model "doomed." Now, rivals in the hosted space are more than willing to sow some doubt in the minds of UpShot customers.

For customers who are considering a switch, the big question is how easily their data can be moved, according to Denis Pombriant, CRM research director at Aberdeen Group, Boston.

"It comes down to a matter of who has the best wizards to import the data correctly," Pombriant said. does have existing relationships with third-party service providers but its track record is mixed, Pombriant said.

Since its inception, the hosted model has used quick deployment as a selling point. That perk -- and these migration programs -- may ultimately create one of the problems CRM claims to solve.

"In the end, it could almost be breeding customer churn," Ferguson said.


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