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Siebel lets software become a service

Stephen Shankland and Dinesh C. Sharma CNET News.com

Published: 26 May 2004 11:20 BST

Renting somebody else's computing systems to run corporate software is increasingly popular, and Siebel Systems is adjusting to the new reality.

Siebel sells customer relationship management (CRM) software, which lets companies track details such as customer purchasing habits, salesperson performance or support-line wait times. Although Siebel leads the CRM market with its packaged software, it faces competition from companies such as Salesforce.com that host the software and just sell access to it.

The Salesforce model has advantages for companies that don't relish the complication, time commitment and expense of installing their own CRM software. And though Siebel remains committed to the idea of selling software packages, it's embracing the idea of hosting the software for customers to rent, said David Schmaier, a Siebel executive vice president speaking at the CeBit America show.

"We see a growing demand for hosted CRM," such as the company's own Siebel OnDemand service, Schmaier said in the show's keynote address. "It's relatively small," with sales of $500m (£275m) in the overall $23bn CRM market in 2003, "but it's growing fast," he said.

One way Siebel hopes to stay ahead of the purely hosted CRM companies is by taking a hybrid approach that lets the same customer run some CRM systems on its own and tap into Siebel's hosted service for other areas, Schmaier said. "You can mix and match," he said, and upgrade from a hosted service to an in-house system when more features are needed.

One of the themes at this year's CeBit is CRM. Other companies exhibiting at the show include PeopleSoft, Microsoft and a small CRM hosting company called Epicor.

Siebel founder and former chief executive Tom Siebel had been scheduled to speak at CeBit America, but canceled at the last minute. In May, Mike Lawrie from IBM replaced Siebel as chief executive.

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