Customer management vendors in heated battle to meet user demand
by Staff -- Manufacturing Business Technology, 7/1/2005 12:00:00 AM MDT
Siebel Systems may have invented the CRM software space, but users seem to believe Salesforce.com has perfected the model for how CRM software should be delivered.
Boston-based AMR Research expects companies to increase spending on CRM software by more than 8 percent in 2006, a major jump from the 2-percent increase reported in 2004. According to AMR's calculations, up to 40 percent of CRM users currently work on hosted—also called on-demand—solutions. That number is expected to grow over the next several years, which seems to validate Salesforce.com's business model.
"Salesforce.com is about delivering CRM software as a service," says company spokesman Adam Gross. "Over the past year, especially, this idea has become mainstream."
Scott Milligan, director of sales process development at JLG Industries, a manufacturer of aerial work platforms based in Hagerstown, Md., chose Salesforce.com "to avoid the burden of installing, operating, and maintaining an infrastructure of servers and operating systems to support our CRM efforts."
Since subscribing to Salesforce.com, Milligan has been pleased with the frequency at which the vendor upgrades the system. Even more pleasing, he says, is that all users get the upgrades simply by logging on to the Salesforce.com Web site, rather than waiting for them to be delivered to individual desktops.
Salesforce.com claims more than 260,000 users spread across more than 12,000 companies. It also says it picked up 40,000 users in the first quarter of 2005 alone.
Siebel, with roughly 3.2 million users, remains by far the leading CRM software vendor in terms of market share, but it has struggled financially for the past few years, and it clearly recognizes the shift in user preference toward the on-demand model.
In June, Siebel unveiled Release 8 of Siebel CRM OnDemand and noted that it was the fifth time the product had been upgraded in the past 12 months. Siebel also has made a point lately of comparing how its on-demand solution stacks up against Salesforce.com.
Siebel has issued at least two press releases highlighting customers who selected Siebel CRM OnDemand over Salesforce.com. And Bruce Cleveland, VP and general manager of Seibel's OnDemand business, has taken to e-mailing the press about his unit's accomplishments.
In a message sent in late June, Cleveland said Siebel spent roughly $299 million—22 percent of company revenues—on R&D last year while Salesforce.com spent $9.8 million, or 6 percent of its revenues. "The result of this ongoing innovation and dedication to success is a win rate of more than 56 percent in head-to-head deals against Salesforce.com," Cleveland wrote.
Cleveland claims those wins stem from Siebel offering complete CRM solutions, including functionality for specific vertical markets, while Salesforce.com offers a "software development toolkit." That statement is in line with Siebel's longstanding argument that Salesforce.com's system is difficult to customize and integrate with back-end applications such as ERP.
In general, analysts have agreed with that assessment, but Gross says the issue has been addressed with the introduction of the sforce platform for integrating third-party applications, and the Customforce tool for creating custom functionality.
Gross also points to the release of Multiforce—which allows applications built on sforce to be linked to a single data model, security system, and user interface—as proof of Salesforce.com's commitment to making its products user-friendly.
Ultimately, users will decide which of these now-bitter rivals will control the CRM software space.
Siebel CEO plans to "reignite growth"
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