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Siebel Takes Telephones Out of the Call Center

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Posted January 20, 2004 By Jim Wagner     Feedback

With the announced purchase of Ineto Services, the CRM On Demand provider gives small businesses the choice between a hosted or in-house service.

Customer relationship management software provider Siebel Systems announced Tuesday its decision to acquire hosted telephony provider Ineto Services for approximately $5 million. Officials expect the deal to close by the end of the month.

The deal fills a void in Siebel's CRM On Demand enterprise software offering. Currently, new CRM customers need to migrate their operations to a hosted software/service package (On Demand) using their own telephone network. For companies that don't have or need a robust CRM solution -- Siebel's CRM On Demand target audience -- the need to invest in their own telephony was a rather onerous pre-requisite.

"With Ineto Services' hosted telephony infrastructure integrated with our CRM On Demand product, we are providing small-and medium-size businesses a one-stop shop to implement an industry-leading call center, quickly and reliably," said Mark Sunday, Siebel information technology and chief information officer senior vice president, in a statement.

It's a return of sorts for the San Mateo, Calif.-based company that pulled out of the hosted CRM space back in 2000, when it decided not to spin off its service.

This time around, however, Siebel's looking for more than just an application service provider hook to its CRM strategy. Steve Bonadio, research analyst at META Group, said that while many of the CRM ASP's "evaporated" in the late 90s, there's been resurgence lately.

"This is an attempt by (Siebel) to capitalize, vis-a-vis, through market presence, in a murky market," he told "I think that what differentiates Siebel's new On Demand offering is the fact they're basically saying 'it's not about how we deliver the applications,' whether you implement them yourselves or you go through a hosted model. What they're doing is providing customers with an option to do either."

Siebel has been working hard on its CRM On Demand strategy, a joint partnership with IBM formed in October 2003, to target smaller CRM operations within the business community. Also in October, Siebel bought out two CRM providers catering to the small-to-medium-sized business (SMB), UpShot and Motiva.

The industry's top CRM provideris finding itself in major competition not with the other major CRM vendors -- SAP , PeopleSoft or Oracle , which pursue CRM from different angles -- but with, a CRM ASP that has made a point of targeting Siebel's CRM software. has spent anywhere between $5-10 million on a marketing campaign (which includes free "No Siebel" T-shirts) to get customers to switch from Siebel to its Web services-based solution. Marc Benioff, chairman and CEO, has said his company's success comes from customers who don't want software, but hosted offerings, and points to a Gartner report that shows its customers have a 95 percent satisfaction rate.

The Ineto buyout takes some of the wind out of's sails, as Siebel moves to a completely hosted CRM service. Its first step was to cut the price of its service when CRM On Demand was first launched, from the upper hundreds per customer using the software to $70. charges from $65 to $125 per seat, depending on the package bought.

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