Siebel Systems Inc. will be a stronger competitor against both Oracle Corp. and Salesforce.com as a result of its acquisition Friday of online billing software maker Edocs Inc., according to industry analysts.
Siebel acquired the privately held Edocs of Natick, Mass., for $115 million in cash to strengthen its offerings in the field of e-billing and online customer self-service, said Dan Ford, vice president and general manager at Siebel, based in San Mateo, Calif.
Siebel plans to integrate Edocs self-service, online service and e-billing applications with its own CRM (customer relationship management) and business intelligence applications, Ford said.
The Edocs applications allow enterprises to reduce paper billing systems and call-center channels by shifting to online billing, payment, and customer service applications.
Over the past few years, Edocs has developed “very sophisticated self-service and customer service” applications that are beyond anything that major CRM competitors such as Oracle and Salesforce currently have, said Allen Bonde, principal with the Allen Bonde Group, a software industry research firm in Framingham, Mass.
“Oracle might have bits and pieces, but they dont have anything like the integrated application that Edocs has,” Bonde said.
With its recently announced Supportforce service, Salesforce.com its getting more into the online customer service market, but thats “still pretty immature right now,” Bonde said.
Also, for a small company with only 180 employees, Edocs has an impressive array of enterprise-class customers, including Cingular Wireless LLC, British Telecom, Target Corp. and GE Consumer Finance Corp., Bonde said.
“They have very good consulting capability for a relatively small company,” Bonde said. “Edocs has a good technology base, but they are also very good at delivering services,” he said. This allows them to do the kind of custom development work that large enterprises expect, he said.
The buyout makes sense for Edocs because customer-service applications, such as its own, have lengthy sales cycles, which can be difficult for smaller companies to managed. Furthermore, Edocs didnt have the access to sales channels and integrator relationships that Siebel has, Bonde said.
The buyout was a good move for Siebel because “customer self-service is one of those things that is only going to gain in importance,” said Denis Pombriant, founder and principal of Beagle Research Group, a CRM market research firm in Stoughton, Mass.
As more people become used to doing business on the Web, enterprises are going to turn to Web customer-service applications to reach the most people while keeping their investments in call centers, he said.
The acquisition “really strengthens their hand in CRM” and keeps them focused on the companys market strengths, Pombriant said. While Siebel has gone through a prolonged period of slow growth and declining profitability, Pombriant said hes “not too concerned about Siebels long-term potential for survival.”
The combination of CRM, self service, e-billing and BI (business intelligence) puts it in a “niche that a lot of people would like to have,” he said.
These were key reasons why Siebel decided to buy Edocs, Ford said. “In Edocs, we have a company that has more than 100 customers—blue chip customers—and that has demonstrated highly scalable technology,” Ford said. Most importantly, he said, Edocs has “great experience in servicing customers on the Web channel.”
Siebel wants to capture a “growing share” of the online self-service and e-billing market that is estimated to be worth $3 billion,” he said.
The two companies already had a technology integration partnership in place that developed as they worked together to deploy their respective applications at several customer sites, Ford said.
Siebel expects to integrate Edocs products into its customer-service application suite in the next year. While Edocs has primarily deployed its software at customer sites, it recently started implementing the products as hosted Web applications to customers who requested it, Ford said.
Siebel plans to deploy the software at customer sites and as part of its own hosted application service, he said.
“We have been active in Web-based self-service ourselves for a number of years,” Ford said. Customers such as Microsoft Corp. are using Siebels own customer-service applications, which shift about 36,000 transactions a day from call centers to Web self-service applications, he said.
Another advantage of the Edocs buyout is that customers will be able to link the customer billing information to Siebels business analytics software to see which customers are generating the most sales and profits.
Customers can use this information to “deliver a differentiated level of service, different offers, different pricing and ultimately a better service experience,” he said.