On Monday Siebel Systems ended weeks of speculation that it would expand its partnership with Microsoft Corp. by announcing that the two software developers have formed an alliance to push a Web services agenda.
Posted Oct 22, 2002
Siebel Systems Inc. announced on Monday that it would expand its partnership with Microsoft Corp. The two software developers have formed an alliance to push a Web services agenda. Loosely defined, a Web service is a way of developing software to expose some business functionality over the Internet using industry standard protocols. Web services are portable, interoperable, and not tied to any one vendor, which is what makes them so useful to users.
In a keynote speech at the Siebel Worldwide Users Conference in Los Angeles on Monday, CEO Tom Siebel told the more than 2,000 attendees that Siebel's applications would support Microsoft's .NET framework for delivery of Web services. The alliance between Microsoft and Siebel is not exclusive. Siebel also has high-profile deals with IBM, Sun Microsystems, and Hewlett Packard.
Siebel plans to invest nearly $250 million in development and marketing of .NET as a platform for its CRM applications. Microsoft would not put a dollar amount on how much it expects to spend on the partnership.
Under the terms of the alliance more than 200 engineers from each of the two companies will work together to conduct benchmark tests and to integrate and cross-certify Siebel applications with Microsoft's software. The alliance includes collaborative development, global marketing, advertising and sales, and support for corporate customers.
Of the deal, Siebel says, "It may well be the most significant (deal) in the history of the software industry."
The first results of the alliance will be seen in the spring of 2003, when Siebel is slated to deliver an updated version of its Universal Application Network, an XML-based enterprise application integration solution that will run on Microsoft's BizTalk Server and also work with Microsoft Visual Studio .NET tools. The UAN, which started shipping this week, was announced in April, with support from IBM, Tibco, SeeBeyond, and Vitria.
Timothy Plzak, vice president of technologies at Safelite Glass Corp., in Columbus, OH, is set to deploy Siebel 7.5--the first version to include the UAN--to more than 600 users, and says that ultimately .NET support will reduce complexity and streamline the process of integration.
Microsoft had reportedly been seeking a high-profile software developer to help showcase its .NET framework. The Redmond, WA-based software giant has spent the past two years drumming up support for .NET, and has publicly said it is betting the farm on the framework.
In July Microsoft chairman and chief software architect, Bill Gates, stated that building the company's .NET architecture has been more difficult than "getting to the moon or designing the 747." He also admitted that consumers, corporate executives, and investors are having a hard time grasping .NET, and that Microsoft had not done a good job explaining the technology.
Speaking at Siebel's user conference, Gates traced the long history of the partnerships between the two companies since 1993, and claimed that because much of the work of this alliance is based on open standards, the entire technology industry was also likely to benefit.
Graham Clark, general manager, business development, .NET platform strategy group at Microsoft, also expects that developments from the alliance will trickle down to make their way into core products at each company, which will ultimately benefit customers.
Eben Frankenberg, executive vice president of alliances at Onyx, which is already delivering a version of its CRM solution for .NET, says the deal is good news.
"As a long-time Microsoft partner and backer of .NET we feel that an endorsement in the enterprise space further validates our decision to go with .NET, and brings more awareness to the benefits of the framework," Frankenberg says.
While most mid-market companies have embraced .NET, many enterprise CRM vendors are opting for rival Java 2 Enterprise Edition.
"I've been looking at the enterprise vendors and I don't see .NET at all," says Mitch Kramer, an analyst at the Patricia Seybold Group, a market researcher and consultancy in Boston. "Most of the big players are all using J2EE. They all need to create applications that can run on a variety of platforms and not be locked in only running on Microsoft 2000 or NT. These CRM vendors are saying they need portability and consistency."
Siebel senior vice president of technology and chief technology officer Ed Abbo says the company also plans to continue to use the J2EE framework as a method of facilitating Web services. "Our customers are using both technologies and we want to deliver technology in line with what our customers are looking for," he says.
"Every software company should be supporting .NET and standards-based platforms for integration," says Rebecca Wettemann, vice president of research at Wellesley, MA-based Nucleus Research. "This gives Siebel customers an additional way to leverage its existing investments and open the systems to help increase ROI."
Absent from Monday's announcement was how this alliance might impact other areas of each company's business. Microsoft is set to make its entry into the mid-market CRM space at the end of the this year, and there is some speculation that Siebel, which sells to enterprise customers, might resell MS CRM to its low-end customers or into departments within the enterprise space.
At the end of August Microsoft announced that it would no longer resell Siebel's CRM offering. Sold to mid-market companies under the name Microsoft Great Plains Siebel Front Office, the bundle, which teamed Microsoft's Great Plains accounting package with Siebel's CRM software, will not be available after the end of 2002. Richard Reimer, director of product marketing for Siebel, says the decision to not extend the contract with Microsoft, which started in mid-1999, was "mutual and for the right business reasons." Reimer says the best fit for Siebel is at the upper end of the mid-market, while Microsoft targets the middle and lower ends of that mid-market spectrum.
"This is no big deal," Patricia Seybold Group's Kramer says. "I'm reminded of the famous quote from Macbeth, 'Out, out, brief candle! Life is but a walking shadow, a poor player who struts and frets his hour upon the stage and is heard no more. It is a tale told by an idiot, full of sound and fury, signifying nothing.'"