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April 21, 2004

Siebel bullish at European User conference

Siebel Systems Inc used its European User conference in Cannes, France this week to release the bedrock products that will determine its ongoing status in the market, with the shipment of the next major release on the version 7 family and the European launch of CRM OnDemand.

By CBR Staff Writer

Version 7.7 focuses on providing enhanced industry-specific functionality but also brings a host of additional CRM functionality across all areas of the product. However, the main emphasis is to continue the cost of ownership theme Siebel introduced when the 7 product line hit the streets.

Cost of ownership was the defining criteria, said CEO Tom Siebel.

We spent years adding features and functionality. In October 2002, we made the decision to stop building functionality. No one could understand the product because it was too complex so in October 2002 we made the decision to shift emphasis from functionality to cost of ownership, said Siebel. The company claims that customers can realize cost savings of up to 40%. However, the TCO model excludes initial license costs.

The company has in the region of 4,000 customers and of these 2,800 have moved to version 7.x. A further 800 to 900 are working on version 6 and Siebel anticipates that most will upgrade this year. In the light of customer criticism about enterprise vendors trying to force them into upgrades, Siebel said it would support the version 7 platform for the next 10 years. This move echoes extended support announcements from SAP AG and Oracle Corp.

The launch of its OnDemand product in Europe was an opportunity for Siebel to stress its commitment to the model and issue a warning to lesser rivals that it intends to dominate the market.

Hosted will continue to be a major focus over the next five years, said Siebel. We have not entered a market unless we feel we can take a leadership position in five years. I think that the company is well positioned to establish same position as we have in call centers [and other areas].

Last quarter the company signed up 229 new customers to the 70 euros per month per user hosted model, covering 2,500 seats. The average number of seats per company was 15 but there was a wide variance in the numbers, with some subscriptions for 500 or more seats. Siebel claims a total hosted customer base of 1,500, which includes customers it gained when it acquired Upshot last year. It does not include trial users when accounting for the customer base. Compared

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with Salesforce.com, Siebel’s market share is tiny but it has only been available for a quarter and has only just launched in Europe.

As a company it continues to believe that hosted will only be suitable for small to medium-sized companies but that even so it estimates the market was worth $0.5bn during 2003 and will grow into a multi-billion-dollar opportunity.

It is not above using its might to try to subdue the competition, reiterating that although it has no intention of getting into a feature and functionality war on the grounds that boundless functionality is not appropriate for the on-demand market, it has the capability to turn on functionality quicker than its rivals can build it because its on-demand product is a subset of its enterprise-level product.

Looking at a different area of its business, Siebel also announced a strategic partnership with Teradata. The short-term intention is to enable Siebel users to make use of a highly scalable, enterprise-class data warehouse. However, it also thinks it will lead to new opportunities in the unsettled enterprise BI market. Analytics is Siebel’s fastest growing and second largest business area.

This article is based on material originally published by ComputerWire

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