Sometimes when you receive an e-mail, it is best to pass it along in you blog without much editing or rewriting. Such is the case with this e-mail from Siebel who basically blasted Salesforce.com in what I can say is perhaps the most strategic “dig” I have ever seen in this business. Even though Salesforce.com has had some significant customer wins recently, Siebel fought back in a way that doesn’t take Salesforce.com head on but instead it erodes their mindshare lead and creates a lot of doubt about using Salesforce.com in a large scale implementation where considerable customization is needed.

This single paragraph is perhapos the crux of the entire argument being made. I haven’t verified the facts but assume they are accurate (unless I hear otherwise – Salesforce – you reading??)

One of the primary reasons Siebel has been able to deliver innovative technology so rapidly is that we invested approximately \$299 million in R&D last year -- 22% of our total revenues. During the same period, Salesforce.com invested around \$9.8 million -- only 6% of their total revenues.

Here is the letter:

Dear Friends and Colleagues,

As many of you know, last week we announced the next version of our hosted CRM offering, Siebel CRM OnDemand Release 8. This marked the fifth upgrade to Siebel CRM OnDemand in the past 12 months. The result of this ongoing innovation and dedication to success is a win rate of more than 56% in head-to-head deals against Salesforce.com.

One of the primary reasons Siebel has been able to deliver innovative technology so rapidly is that we invested approximately \$299 million in R&D last year -- 22% of our total revenues. During the same period, Salesforce.com invested around \$9.8 million -- only 6% of their total revenues.

You've also probably seen the many new CRM OnDemand customers Siebel Systems has announced over the past couple of months. They chose Siebel CRM OnDemand for a variety of reasons, but they all have one thing in common -- they chose to buy a CRM solution rather than a CRM software development toolkit. They have told us that they want the onus of development to rest on their CRM provider, not on their shoulders -- while Siebel makes heavy investments in R&D, our primary hosted CRM competitor has outsourced its R&D to its customers and partners so they can invest in more important areas such as PR and advertising.

Analysts including the Gartner Group are cautioning customers that complex Salesforce.com deployments can be costly (see http://www.gartner.com/DisplayDocument?doc_cd=127182). Here is what our customers are saying in their own words:

"We wanted a single view of the customer across multiple touch points. With its ease of use, the Siebel CRM OnDemand Life Sciences edition gave us out-of-the-box support for the complex relationships between doctors, hospitals, practices, clinicians and insurance companies that is simply not available with other hosted solutions or would have required costly customization and time to address through workarounds. We chose Siebel Systems because of its superior reputation, rapid deployment capabilities, limited upfront capital investment and overall reliability." -- Scott Coleridge, Executive Vice President of Sales, FEI Women's Health

"As the premier data center provider for managed dedicated server hosting in the Rocky Mountains, we are looking to expand beyond our local region.

This kind of growth could not be handled effectively without the comprehensive customer relationship management capabilities that Siebel CRM OnDemand provided. Salesforce.com didn't offer us the real-time analytics capabilities that have given us 24/7 visibility across our entire systems. With Siebel CRM OnDemand we can tightly manage all areas of our company, regardless of location or time of day, something that is essential to our competitive value proposition of providing superior application support."

-- Daniel Milburn, Director, Sales and Operations, Consonus

As I've said before, if you're interested in talking with me about Siebel CRM OnDemand or new developments in the hosted CRM market, please reply to this e-mail. If you would like to be removed from this list, please let me know at any point in time. Otherwise, I look forward to keeping in touch.

Best regards,
Bruce
Bruce Cleveland
SVP and GM, OnDemand and SMB
Siebel Systems
www.crmondemand.com