16 October 2003 Siebel Systems, the market leader in customer relationship management (CRM) software, is to buy UpShot, a company that supplies CRM applications over the Internet as a monthly, subscription-based service.
The move comes two weeks after Siebel announced plans to offer a similar service, Siebel OnDemand — its second attempt to launch in two years. Its previous attempt, Sales.com, was launched in 1999, spun off in December of that year as an independent company, but subsequently re-acquired and shut down in June 2001.
While Sales.com floundered, several smaller companies were more successful at selling CRM applications as a web-based service, most notably UpShot and its rival, Salesforce.com. UpShot is the smaller of the two with sales to around 1,000 companies (compared to Salesforce.com’s 7,500), but its customer roll call includes names such as General Motors Acceptance Corporation (GMAC) and Xerox.
Siebel will buy Upshot for up to $70 million in cash and plans to merge the Upshot service with the still-in-development OnDemand service.
Siebel CEO Tom Siebel claimed the acquisition will enable his company “within a very short time to establish a commanding lead” in the market for hosted CRM applications. “The UpShot acquisition advances our strategy of ‘CRM for Everyone’ — our commitment to provide CRM solutions for every segment of the market, every type of organisation, and every type of user,” he said.
Siebel must widen its appeal if it is to offset dwindling revenues. In 2002, license revenue — the most accurate indicator of momentum in the software business — fell 34% to $700.3 million, from more than $1 billion in the year before.
New software licence sales have continued to head downwards during 2003, although revenues appear to have stabilised, quarter-on-quarter, at just over $330 million.
By offering its software — and Upshot’s — as a service, it hopes it can attract new, smaller customers that do not have the resources to commit to the large upfront investment and lengthy installation process typically associated with its software.
In an accompanying announcement, Siebel said it also plans to spend $3 million on buying the assets of Motiva, a small software company that supplies applications for tracking performance-based employee compensation.