Siebel taps Sun for hosted CRM plan

Siebel Systems has enlisted technology partner Sun Microsystems to help it distribute a new bite-size version of its wide-ranging customer relationship management software.

As part of its utility computing initiative, Sun is helping Siebel find application-hosting partners for Siebel's new pay-by-the-month software program, called Siebel CRM OnDemand, said Sun spokeswoman Terri Nissen. "We're looking to expand the availability of CRM OnDemand," Nissen said.

Siebel announced the OnDemand product earlier this month and named IBM as its initial hosting services partner, with IBM housing the applications on its own equipment on behalf of customers.

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A Siebel representative said that the company's OnDemand agreement with IBM is not exclusive, but refused to confirm the Sun deal. "We have not made that announcement," the representative said. Earlier this month, Siebel Chief Executive Tom Siebel said during an earnings teleconference that the IBM deal was the first in what will be a series of OnDemand services from the company.

Sun is aggressively pursuing alliances with information technology services companies, including SchlumbergerSema and Affiliated Computer Services, that could prove useful to Siebel in its quest to expand its OnDemand distribution network, Nissen said. Through such alliances, Sun allows corporate customers to purchase server-processing power based on actual usage of the machines. The variable pricing structure is part of Sun's N1 utility computing initiative.

Nissen declined to provide further details on the Siebel agreement, such as pricing and whether the companies will bundle their products together.

Adding distribution partners to sell OnDemand is a smart move on Siebel's part but is not without risks, said Sheryl Kingstone, an analyst with The Yankee Group. For one thing, Siebel must ensure consistent service levels among various partners and keep each one educated about its products. "It's just a very complicated strategy to manage," Kingstone said.

Siebel's OnDemand products are aimed at small and midsize companies turned off by the steep software license and consulting fees common with Siebel's traditional applications. OnDemand is Siebel's second attempt at the hosted-software business model, which has given rise to high-flying rival Salesforce.com. Siebel unplugged a similar service, a unit of Siebel called Sales.com, two years ago after profits for the unit proved elusive.