Less than two weeks after announcing its new Siebel CRM OnDemand service, Siebel Systems has agreed to buy one of the hosted CRM (customer relationship management) market's leading vendors, UpShot, in a deal that may be worth as much as $US70 million.
The deal is expected to close in early November, according to a Siebel statement. Siebel will pay $50 million cash, with an additional $20 million to be paid if targets are met in 2003 and 2004.
Siebel will for the foreseeable future continue supporting and selling both its own hosted CRM software and UpShot's, company spokesman Burghardt Tenderich said. Although the company described the acquisition as part of "a roadmap to converge the products", it doesn't necessarily plan to merge them entirely, Tenderich said.
"We might have different flavours, addressing different needs," he said. "We're really not prepared to discuss that at this point."
Siebel recently re-entered the CRM ASP (application service provider) market with its Siebel CRM OnDemand service, a joint offering with IBM, which will provide the hosting infrastructure and management for the service. Priced at $70 per user, per month, Siebel CRM OnDemand competes directly with a pack of dedicated hosted CRM vendors offering similarly priced products, including Mountain View, UpShot and the market's most visible vendor, Salesforce.com.
UpShot doesn't release figures on its customer base, but analysts estimate the company has several thousand companies signed on as customers.
Although Siebel said it plans to continue selling the UpShot CRM service, Yankee Group analyst Sheryl Kingstone said it doesn't make sense for Siebel to maintain two products. She expects the company to pick off the best features in UpShot, such as its tight integration with Microsoft Office, and bring them into Siebel CRM OnDemand.
"It validates that Siebel is pretty serious about making a play in this market," she said. "Now they've got a bigger team that really understands how to deliver software as a service. That's something Siebel didn't really have expertise in."
Siebel also said yesterday that it had acquired incentive management software maker Motiva for an undisclosed sum. Siebel plans to use Motiva's technology to enhance its own Siebel Incentive Compensation product.