UAN will be bigger than CRM, Siebel says

SAN DIEGO (10/08/2003) - Late Tuesday afternoon, R. David Schmaier, executive vice president of Siebel Systems Inc., fielded questions on the company's announcement made that same morning that it will partner with IBM Corp. to deliver Siebel CRM solutions in a hosted, IBM OnDemand, platform.

OnDemand, targeted at both small to medium-size businesses and divisions within larger companies, will be priced at US$70 per user, per month. In response to the question would the relatively inexpensive hosting model cannibalize sales of Siebel's traditional licensing model, Schmaier said it could in fact "positively effect revenue."

Although the hosted market is still "small in the scheme of things," Schmaier said that hosting enterprise applications is now a legitimate market, adding that "the big deals have gone away."

However, the Siebel executive also warned that as a company grows to about 200 users they should and will consider an on-premises solution.

"If you believe IT is a competitive advantage," Schmaier said, the on-premises solution is the better choice. On the other hand, he said, if a company agrees with the recent Harvard Business Review analysis that IT doesn't matter, a hosted solution will suffice.

In addition, larger companies will be loathe to trust critical CRM data such as leads and forecasts to an outsourced service.

Schmaier also responded to questions about Siebel not meeting Wall Street expectations for the third quarter.

"Our results are stabilizing and are in line with the consensus estimate of Wall Street," he said.

Looking ahead, Schmaier ticked off four major Siebel growth opportunities for the company, including development of its UAN (Universal Application Network), which he said will become four to five times larger than the CRM business. Other areas Siebel will focus on to grow its business are CRM analytics, OnDemand, and an increased focus on "going deeper and deeper into new vertical [markets]."

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