Siebel Systems Inc., in its latest move to attract a broader customer base, plans to enhance its fledgling Siebel CRM OnDemand hosted services with technology it is acquiring with customer relationship management application service provider UpShot Corp.

Siebel plans to merge the Mountain View, Calif., company, which it is purchasing for $70 million, with its own forthcoming hosted offering by the second quarter of next year. The merger of the two technologies figures to change the face of both and gives the CRM market leader a more complete hosted offering for small businesses and departments at large organizations.

The deal is expected to close next month, less than two months after the company unveiled Siebel CRM OnDemand, its joint offering with IBM.

UpShot's offline client is chief among the technologies Siebel intends to migrate to Siebel CRM OnDemand. The client, which is based on Microsoft Corp.'s Excel software, will be a second offline option along with Siebel's own offline client, according to Ken Rudin, vice president and general manager of Siebel CRM OnDemand.

Siebel also plans to add certain UpShot Web services APIs—typically used to support integration with other applications—as well as performance management technologies for monitoring and maintaining the quality of the service.

"Behind the scenes, [UpShot] has some very sophisticated management processes in place for maintaining and monitoring the application hosting that we plan to take advantage of," Rudin said. "They're processes that make sure the service is rock-solid."

When the combined service, which Rudin called a "superset" of Siebel and UpShot technologies, is ready, UpShot's current 1,000-plus customers will be automatically updated to the new service, if they so choose. Siebel will gauge UpShot customer interest before committing to continuing the current UpShot service, Rudin said.

Pricing for the combined service has not been determined.

"I would expect that in the future, we may provide different tiers for different customers," Rudin said. "We could offer everything at $70 a month, everything at $80, or a $70 version and a $90 version."

Marc Sunday, senior vice president of Siebel's OnDemand product line, will continue to oversee the San Mateo, Calif., company's hosted service once it is merged with UpShot. Robert Reid, president and CEO of UpShot, is expected to run Siebel's hosted CRM service business.

UpShot's founder and chairman, Keith Raffel, who will join Siebel as a vice president and work on the Siebel CRM OnDemand team, said most of the changes in UpShot will be on the back end and be transparent to users.

"Will our customers see something different? Undoubtedly they will," Raffel said. "We'll have something that takes the best of both sides. ... It'll look like a new release, which is what we do all the time."

UpShot user Cheryl Miamidian, regional vice president at M Squared Inc., in San Francisco, seemed unconcerned about the Siebel deal.

"So far, we have a great relationship with UpShot; we don't foresee it changing," Miamidian said. "As far as we're concerned, it's business as usual until it's not."