Enterprise software vendor Siebel Systems has announced plans to attract more small and medium sized companies to adopt its CRM software despite having little or no history with companies of that size.
On Wednesday the company announced a three part plan to woo small to medium-sized enterprises (SMEs) comprising a new business unit, specifically designed products and a reseller/partner strategy.
"Small to medium-sized organisations have an unmet need for proven, complete CRM solutions that enable them to upgrade from spreadsheets, home-grown contact development tools or legacy software systems they are currently using," said Bruce Cleveland, general manager of Siebel OnDemand and SME.
But despite its aggressive commitments, Siebel has very few links into the SMB market, and rivals criticise it for being much more complex and expensive than the new, hosted approach to CRM.
Siebel's decision to ignore smaller companies up until now has allowed a new wave of CRM players to enter the market offering cheaper, hosted software including companies such as Salesforce.com, RightNow Technologies and Onyx.
In a recent report, analyst firm Gartner claimed that Siebel is not doing enough to promote its own hosted applications despite the booming market for software as a service.
"A lack of emphasis on the product [The OnDemand product was only recently launched in Europe] continues to enable upstarts, such as Salesforce.com, to vastly outperform in the subscription market worldwide, and especially outside of the United States," said Gartner analyst Michael Maoz
But despite a general negative reputation with some customers over issues such as poor ongoing customer support, Gartner added that there is no technical reason why Siebel should not win more of the business that is now flowing to companies such as NetSuite and Salesforce.com.
Responding to Siebel's SME strategy announcement, Phill Robinson, VP marketing EMEA at salesforce.com said Siebel does not understand the SME market and doesn't know how to sell to SMEs.
"The major vendors are all starting to exploit the SME opportunity despite having engineered software architectures built for the larger enterprise. Siebel has failed three times over the past five years. What says they'll make it this time?"
Robinson added that Siebel's channel strategy has always been a "dog's breakfast" and the company doesn't how to partner with other organisations. "What SME's are looking for from CRM is to reduce cost, risk and complexity. Siebel is expensive, difficult to use, over-engineered and fraught with danger," he added.
Siebel has also been criticised by CRM rival RightNow Technologies for its On-demand strategy which is hosted by third-parties including IBM and BT.
In a recent interview with ZDNet UK, RightNow's chief executive Greg Gianforte said that software company using third-parties to host applications couldn't provide an adequate service to customers.
"Any company that uses a third party to host, such as Microsoft, SAP, PeopleSoft - you can just list all the dinosaurs -- they have failed the litmus test because they are not really believers. Until they re-write their applications from scratch and use it as a primary go-to-market they really haven't embraced this model," he said.
But Neil Morgan, Siebel vice-president of marketing argued that software companies shouldn't be expected to host applications as this isn't their core competency. "I think the opposite. Who technically hosts it is irrelevant to solving that business problem. We don't want to have to worry about the scalability and the security -- all the back office stuff you have to be good at to host applications. I think the market for hosted applications will go to the EDSs, the BTs and the IBMs. I don't think you will see in the future so called software or service companies trying to build and host applications. They will separate out," he said.
Morgan added that Siebel's other advantage over the newer entrants into the CRM market is that it offers synchronisation between its hosted and on-premises software which providers such as RightNow Technologies cannot offer. "I think the companies that came out earlier are sat thinking about how they deal with customers who want a hybrid model -- so someone like a RightNow just isn't able to do that. They are not able to synchronise a hosted and on-premise application," he said.
RightNow also claims its unique selling-point is that it offers hosted and on-premises software unlike competitor Salesforce.com which only supports the hosted model.