In a packed auditorium, Siebel's chief executive Tom Siebel told the 1,800 attendees that the new service provides a powerful CRM application from a simple browser interface: "Small and medium organisations -- and divisions of larger organisations -- are choosing the hosted model to avoid upfront capital expenditure and to reduce in-house IT requirements. This is Siebel meets Google," he said.
Additionally, Siebel explained that OnDemand is more than a standalone CRM solution because it can also be integrated with the company's traditional CRM application. "We are in the business of delivering customer-facing applications for any organisation and any user," he said.
Earlier this year, Forrester Research predicted the market for CRM software will top $3.5bn (£1.9bn) in licence revenue by 2006, with hosted CRM services expected to account for 15 percent of the total. Siebel is hoping its OnDemand offering will help the company fight off competition from rivals such as Salesforce.com, which is preparing a £50m IPO later this year and is pursuing a target of one million subscribers by 2007.
Siebel 7 was first launched in 2001, but the company was getting complaints from customers that the product was too expensive to deploy, manage and upgrade. In response, Tom Siebel said that in October 2002, the company's developers were told to stop increasing the functionality of products and instead concentrate on redesigning them to reduce operational costs.
"We took a year and a half break from feature development. We wanted to understand the cost of ownership of this application and cut it in half, so we stopped designing features and functions -- except those that will reduce these costs," said Siebel.
Siebel admits the company did not achieve its target of reducing costs by 50 percent, but he said they got close: "We did not achieve a 50 percent cost saving -- there we failed -- but we did achieve 39 percent saving, which is pretty darn good. We reduced the cost of installation by 30 percent, configuration by 32 percent, operations by 30 percent and upgrades by 35 percent. Version 7.7 is the highest-quality, most functionally rich and lowest-cost product we have ever shipped," he said.
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