Siebel Takes (Another) Shot at ASP Model

    October 8, 2003

After a good bit of speculation, IBM and Siebel have finally embraced the software-as-service model with the announcement of an on-demand, hosted CRM offering. “Siebel coming back into the ASP marketplace, after previously launching and then killing, is clearly a defensive response to the success that other vendors, specifically are enjoying,” says Jim Dickie, partner, CSO Insights. “I doubt that this will have a major impact on their enterprise-Fortune 500 account business, as the majority of those firms want to manage their CRM applications internally for a variety of reasons.”

Siebel CRM OnDemand is a joint effort between the two giants who will share development, marketing, sales, delivery and service responsibilities. For $70 per month per user, companies (and individuals) can sign up for OnDemand. The companies say they have designed the offering to be easy to use with “practically zero start-up time” and rapid deployment. “No doubt that Siebel/IBM’s entry into the ASP marketplace (Siebel’s second time) is a further validation of a software-as-service model that doesn’t really need much more validation,” notes Paul Greenberg, president of The 56 Group.

Siebel CRM OnDemand users can start small and grow their CRM projects as needed. Lending weight to the soaring ASP model, the ASP solution lets users manage everything from contacts, sales leads and competitors to products, prices, marketing campaigns and service request. While Dickie notes that the solution is positive for the user community and CRM in general, he explains that ASPs are fairly entrenched, so Siebel’s eventual domination is not a sure thing. “Vendors like Salesnet, Upshot, and architected their product from day one to meet the needs of the SMB (small/medium business) marketplace,” says Dickie. “When they first came to market they only had a fraction of the hundred-plus features included in the Siebel offering, but what they did have were the key capabilities that sales people really were going to use on a regular basis.”

CRMGuru panelist S. Premkumar, formerly of Fugen IT in India, called the move a “good SME thrust” and could draw the attention of the middle market for Siebel. “But only if (and I stress the word if) they have correctly architected their offering,” says Dickie. “If they have truly designed this from the ground up to meet the needs of the SMB users, then they could get a meaningful piece of the market, but I would doubt they will displace the ASP market leaders.”

Don’t expect Siebel’s ASP competitors to cut any slack.’s CEO Marc Benioff said in a interview in August, “Why should this attempt to re-enter the ASP market be any different? Siebel’s entire business philosophy is to sell expensive software to big companies with deep pockets and reap the rewards of maintenance fees and license renewals. If history is a guide…it won’t be pretty.”

CRMGuru founder Bob Thompson echoed these sentiments in “Siebel Systems: Boom, Bust, Now What?” which was published before this announcement, “I give a Siebel/ASP solution low odds for success, for much the same reasons that full-fare airlines like United failed to beat discounters like Southwest, or that full-service computer companies like IBM and HP struggle to win profitable business against the ultra-efficient Dell.”

Greenberg doesn’t believe that Siebel gets the market yet. “I’m going to have a hard time believing that Siebel of the $10 million SFA implementation is going to be able to accommodate a market they have already proven to not understand,” he says. “Take a look at their approach to SFA generally in the Infoworld of last week in the Unisys ‘Ask The Experts’ ad. While many of the key vendors are moving toward SFA that benefits salespeople, Siebel is talking about improved sales management tools — a severe lack of understanding of what ‘next generation’ SFA is.”

OnDemand features built-in analytics help users move quickly on actionable information. Siebel CRM OnDemand offers a path for companies to seamlessly integrate with and automatically migrate to an on-premise Siebel CRM solution. Regardless, “Siebel is now officially eating crow because Tom Siebel had pooh-poohed both the model and about a year and a half ago as not credible and not going to survive respectively,” says Greenberg. “Now, they are thriving and Siebel is holding up his pants which has no belt, while he tries to hightail it to the front of the line. Second, Siebel is providing a first-generation product while the ASPs are currently in their third generation.”

*Published with permission from

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Teri Robinson is a Managing Editor, responsible for the CustomerThink newsletter and for premium content and reports at She has nearly two decades of experience as a technology journalist covering mobile, communications, and e-commerce issues for leading trade publications such as InformationWeek, ComputerWorld, PC Magazine, MicroTimes, and InternetWeek. Contact Teri at