Big set back for Salesforce.com

IBM who implemented the single biggest implementation of Siebel CRM in the world has decided to do away with it. Siebel is a subsidiary of Oracle. Good news is that it has decided to go with a cloud solution. The bad news atleast for Salesforce.com is that  it did not win the contract. 

This is what it means for the industry 

1. Cloud is a mainstream option and here to stay. It further emphasizes that world's big companies are becoming increasingly confident of sharing their data across cloud and the cloud providers have evolved a lot from their initial offerings. 

2. Siebel and subsequently Oracle needs to up their game to come up with a good cloud solution, else they will end up playing the catch up game for a lot of years to come. They are still playing the catch up to Salesforce.com, who is the industry leader. 

3. The industry leader Salesforce.com has a new competitor. SugarCRM who won the contract  has got the mother of all deals. SugarCRM is open source and is lot cheaper than Salesforce.com. IBM justified their decision of going with SugarCRM by saying that it is an open source system and it will interface well with the other IBM systems. 

4. Salesforce.com who is still the industry leader, is under pressure to keep the high margins. However, its the most expensive option compared to SugarCRM and Microsoft dynamics. They will probably have to take a look at their pricing model after this win, if they want to make sure that SugarCRM competition is kept in check. 

5. On the other hand, for SugarCRM, this can be considered a big big win and they might decide to become public and leverage this deal. The holding pattern of SugarCRM is not clear, but it is probably held by venture capitalists. 

Conclusion
This is a good news for the industry. There are rumors which suggest that Salesforce.com did not bid for this deal and their are rumors that Salesforce.com  was not invited. Either way this is not good for Salesforce.com. Having said that, Salesforce.com has a very strong and good suite of PaaS and SaaS. They are still the industry leader and will continue to do so for at least next 3-4 years.