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SCMP Reporter

Tepid Asian demand for software to automate companies' marketing and customer contacts is likely to increase under a US$300 million initiative between IBM and Siebel Systems, says a senior Siebel official.

Siebel, the world's top supplier of software applications for customer relationship management (CRM), last month announced a move to standardise on computer giant IBM's Lotus and WebSphere software platforms.

The two firms will also jointly produce customised software for specific sectors.

Built-to-order CRM systems will be aimed at the financial services, communications, automotive, electronics and technology, hospitality, life sciences, consumer goods, retail and government sectors.

These efforts are expected to bring down the cost and complexity of deploying Siebel's CRM systems, whether companies use Microsoft-based or Java-based applications.

Silicon Valley-based Siebel standardised its CRM software on Microsoft's .NET Internet services platform last year.

'Although our initiative with IBM has a worldwide scope, we see plenty of untapped opportunities in Asia, including China,' Siebel executive vice-president for products David Schmaier said.

Citing data from research firm Gartner, Mr Schmaier said the IBM-Siebel venture sought to reach the US$90 billion market for integrating newer Internet-based applications with old business programmes. It was also aimed at the US$21 billion world market for customised CRM systems.

The Asia-Pacific market for CRM software is expected to reach US$561.8 million this year, according to market consultancy Frost & Sullivan.

Technology vendors have been eager in recent years to boost demand for CRM in China, where there are potentially 1.3 billion customers with which companies can seek to establish strong relations and wider contacts.

Prospects for CRM deployment have also been brightened by China's admission to the World Trade Organisation, its fast-developing telecommunications infrastructure and steady technology investments by its large financial services, telecommunications and manufacturing industries.

Tightened corporate spending on technology has dampened demand for CRM software worldwide.

As the market leader, Siebel has been hit hard. Its revenues dropped to US$1.64 billion last year from US$2.08 billion the previous year.

But Siebel East Asia managing director Terence Chan said the company remained optimistic in China.

Siebel had made 'good progress' in the mainland, he said, despite stiff competition from major rivals SAP, PeopleSoft and Oracle, and local business software firms.

Its most high-profile deal in China to date is a CRM software supply contract with the pharmaceutical firm Shanghai Roche. Mr Chan said more deals were under way, but he gave no details.

Mr Schmaier said IBM's huge marketing resources and well-established services team in Asia would help Siebel make a big push forward to deploy more CRM systems in the region.

Siebel has more than 3,500 CRM deployments worldwide.

IBM and Siebel first formed an alliance to market Siebel's CRM applications in 1999, with a focus on their ready integration with IBM's DB2 database software.

The result to date has been 1,000 joint customers, including Australian telecoms giant Telstra, General Motors, AXA and Deutsche Telekom.

Ten to 15 per cent of these joint customers were in Asia, Mr Schmaier estimated.

He said the new three-year initiative between Siebel and IMB would lead to further growth over the next few years.

The initiative involves synchronised product releases, more than 200 joint developers and 1,100 Siebel-certified IBM consultants for CRM projects.

The plan by Siebel and IBM to produce custom software jointly through IBM's industry business units was likely to 'generate more revenue than deeper Siebel support of IBM WebSphere technologies', according to Gartner.

'Customers in major industries such as financial services, automotive and life sciences that have unique requirements often choose to build custom software,' Gartner said.

'In bidding for that business, IBM can now embed Siebel applications and win customers that Siebel or its competitors wouldn't have.'

Under their expanded alliance, IBM and Siebel Systems will launch a new branch teller system for retail banking in the second half of the year.

This first joint offering is expected to be especially attractive to China's growing banking sector. For most financial institutions, the retail branch network is the most expensive customer sales channel to maintain.

HALTING THE SLIDE

Tightened corporate spending has dampened demand for customer relationship management (CRM) software

The Asia-Pacific market for CRM software is expected to reach US$561.8 million this year

There are potentially 1.3 billion customers for the software in the mainland



Tie up with Siebel on software for handling clients