Just two weeks after announcing its entrance to the hosted CRM application services space with its own solution, Siebel Systems Inc. announced Wednesday that it will acquire hosted CRM application services provider UpShot Corp.
In a separate deal, Siebel also bought incentive compensation management software developer Motiva.
The UpShot deal is valued at $70 million. Under the terms of the deal, $50 million will be paid in cash upon closing, with up to an additional $20 million to be paid in earn-outs during 2003 and 2004 .
Siebel plans to offer UpShots service, which has more than 1,000 customers, in addition to its new Siebel CRM OnDemand service, due to be available by the end of the year. The company plans to eventually converge both products.
“Joining our forces with the CRM, support, and distribution capabilities of Siebel is a huge win for our customers—who will benefit from Siebels strength, viability, and resources—as well as for our employees,” said UpShot President and CEO Robert Reid in a statement. “This combination vaults us into leadership in the hosted CRM marketplace.”
Siebel will provide pre-built integration for both its and UpShots hosted services to the Siebel on-premise enterprise applications. A future combined offering will be built on Siebels CRM product architecture and UpShots best practices for hosted CRM, Siebel officials said.
Siebel will support both offerings and enable customers to transition from UpShot to Siebel CRM OnDemand. Customers who elect to continue using the existing UpShot product will receive support indefinitely, Siebel officials said.
“The UpShot acquisition advances our strategy of CRM for Everyone—our commitment to provide CRM solutions for every segment of the market, every type of organization, and every type of user,” said Siebel Systems CEO and Chairman Tom Siebel in a statement. “The employees of UpShot bring us years of experience that will enable us to rapidly take a leadership position in the hosted CRM market.”
Keith Raffel, UpShots founder and chairman, had warned Siebel two weeks ago that it would face stiff competition from UpShot in the hosted CRM space. Raffel now embraces Siebel.
“Since inventing online CRM in 1999, we at UpShot have pursued a vision—delivering the easiest-to-use, fastest-to-deploy solution for increasing a companys revenues—on a massive scale,” said Raffel in a statement. “We believe nothing could bring our dream closer to reality than this merger with Siebel Systems.”
The deal is expected to close in November.
Siebel has already closed the Motiva acquisition, valued at about $3 million, and plans to integrate the companys incentive compensation management software with its own Siebel Incentive Compensation product this quarter.
This integration will enable users of Siebel Incentive Compensation to better handle a broader variety of compensation plans and better address the variety of compensation approaches such as weighted attainment across multiple products, automatic graduation of sales professionals from one compensation plan to the next, and variations in commission rates at different times in a financial period. Motivas modeling environment will also become part of the Siebel Incentive Compensation product line.
Siebel also on Wednesday reported third-quarter earnings for the period ended Sept. 30. Total revenues fell year-to-year for the ninth straight quarter, from $357.2 million to $321.4 million. License revenues were down from $126.8 million to $110 million year-to-year. Taking into account nearly $105 million in restructuring charges, Siebel lost $59.3 million in the quarter, compared to a $92.1 million loss in last years third quarter.
“Im pleased with our license revenues,” said Tom Siebel during the companys earnings call. “Our salespeople did a good job.”
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