In October the CRM market was turned on its head by two Siebel Systems announcements. First, the CRM giant announced with IBM that the companies would provide a hosted version of Siebel’s CRM product, called Siebel CRM OnDemand. Analysts hailed the move but expressed concern for the future of UpShot, which would be competing head-to-head with the new Siebel product. Then Siebel announced it had purchased UpShot. In just two weeks, the CRM landscape was significantly altered.

Siebel CRM OnDemand will allow companies to manage leads, forecasting, prices, customer service and marketing efforts for $70 per month per user. It also includes built-in analytics. Sheryl Kingstone, CRM program manager at the Yankee Group, says her first take on the product is that it’s “pretty strong. It’s a great first move, even without the UpShot acquisition.”

She anticipates one of its strongest features will be its integration with the on-premise enterprise system. Now large Siebel customers with small, remote divisions that couldn’t afford the enterprise product in the past will be able to purchase CRM OnDemand and tap into the parent company’s enterprise CRM system to share sales leads and other data. “The hybrid approach is what everyone wants,” says Kingstone.

Still, Siebel has weaknesses, particularly with Microsoft Outlook integration. It’s expected the company will address those weaknesses with its UpShot purchase. UpShot, the first company to offer a hosted CRM solution, introduced a series of innovations for the hosted CRM market, including the first solution for Microsoft Outlook integration. In the near term, Siebel says it will offer both the UpShot solution and its own Siebel CRM OnDemand product, but plans to converge the products down the road. Look for Siebel to dismantle the UpShot product and take the best pieces when that convergence happens, says Kingstone, in particular the integration with Outlook.

These moves “really solidify Siebel’s dedication to the market,” Kingstone concludes. “They’ve made mistakes in the past, but this affirms their commitment. I think new CRM customers that automatically would have gone to salesforce.com now will take a hard look at Siebel.”

Siebel says CRM OnDemand will be available later in the fourth quarter this year. For more information visit www.crmondemand.com.