Hosted apps aim to bypass IT managers

Hosted applications vendors are deliberately shutting IT managers out of the software-purchasing loop in their bid to sign up end-user companies. However, CIOs and analysts warn that enterprises need to carefully distinguish short-term ROI rhetoric from long-term data integration headaches.

The warnings come as mud slinging between CRM vendors Salesforce.com Inc. and Siebel Systems Inc. notably intensified last week after Salesforce.com Asia-Pacific manager director Doug Farber dubbed Siebel's new on-demand offering as "lipstick on a pig" at a press briefing in Sydney last week.

Farber made the comments when asked if Siebel's hosted OnDemand offering posed a threat to Salesforce's aspirations to achieve penetration in organizations with more than 1,000 users.

"(Siebel) has spent its life denigrating us and now it is trying to copy us. (A monthly billing cycle for software) allows us to circumvent IT (departments and budgets) in a lot of cases -- we can fly in under the radar. Sales guys are very averse to any sort of administrative overhead, they just don't like that crap," Farber said.

Farber claimed Salesforce has now signed up some 161,000 subscribers worldwide to its monthly pay-as-you-go CRM offering, including the likes of Vodafone, Baycorp Advantage, Europecar and Travelex.

Not content to let insults rest there, Farber went on to compare Siebel's customer appeal to the waning careers of the Hollywood sex symbols. "I see Siebel as the Farrah Fawcett of the IT industry. Over time there have been a whole lot of bad role choices and some bad plastic surgery (to try and fix things). It's all gone sideways. The big end of town is where (CRM suite vendors) made the most noise, but it's also where there were the biggest debacles," Farber said.

Such under-the-radar raids may be winning over sales reps, but IT managers confronting them are underwhelmed, according to the CIO of an Australian financial services company piloting Salesforce.

"I don't know if we'll be deploying it, we're piloting it. I don't think it's true to say it bypasses IT because at the end of the day IT has to make data from all these systems work together. We pilot lots of stuff ... that doesn't mean we do a rollout -- it's just how vendors make it sound," the CIO said.

Meta Group senior analyst, technology research services, Brian Prentice, said mud slinging between vendors did not help users and "muddied the waters", adding that Salesforce would eventually have to confront integration issues.

"It is trying to increase the customization and functionality of its application more and more; I don't see how it can bypass the IT shop. The broader issue is not how a division deploys a line-of-product solution, it's how you integrate it back to the enterprise," Prentice said.

However, Prentice said despite Siebel's undisputed CRM pedigree, its current on-demand pricing regime may prove to be an initial obstacle to customer uptake.

Siebel Australia was approached for comment on Farber and Prentice's statements but did not respond.

» posted by abennett

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