AS PART OF a multiyear global strategic alliance, Siebel Systems will incorporate Microsoft's .Net software into products and participate in related development and marketing efforts, the companies announced Monday.

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As part of the partnership, Siebel has committed to using the .Net technology with the next generation of its CRM ( customer relationship management) applications, including its enterprise sales, marketing and service applications, the companies said in a joint statement.

Siebel will work with Microsoft on development, marketing, global sales, and integrated support for enterprise customers. The work will take place in joint development laboratories both in San Mateo, Calif., and Redmond, Wash., Siebel and Microsoft said.

"The Web services inflection point in the industry is bringing to light the fact that applications and data that are critical to organizations don't have to live in isolated islands anymore," said Adam Sohn, Microsoft .Net platform product manager.

"We're seeing a real desire from customers to have the technology adapt to their businesses and not the other way around," Sohn said. "This idea of business process computing is something that Siebel has been leading the discussion on. Siebel is a clear leader in enterprise e-business applications -- CRM in particular -- and has been evolving that to support business processes right out of the box."

The alliance will prove especially helpful to Siebel customers struggling to access valuable enterprise data trapped at the client, said Nick Brown, director of the Siebel Microsoft Program Office.

"The Microsoft technology stack around Web services helps you seamlessly integrate to Office, [which] is really going to help our customers with greater visibility to this data," Brown said.

While Siebel plans to integrate its product offering with .Net, it will continue to also work with other platforms, most significantly Sun Microsystems' J2EE (Java 2 Enterprise Edition) technology.

When Siebel announced the latest version of its CRM eBusiness applications, Siebel 7.5, last month, the company stressed that keeping a balance between .Net and open standards was an important part of its strategy to compete with companies like SAP and PeopleSoft.

With Microsoft also entering the CRM market, John Simpson, director of sales consulting for Siebel Systems U.K., said that the company was "writing off the small-business market" that Microsoft was targeting.

"It would be naive to say that in the long term, five years plus, Microsoft will remain happy with the small market and with the desktop. We're lucky because with Microsoft in Seattle and SAP in Germany, it's hard for them to collaborate, whereas we are in a good position to collaborate with Microsoft," Simpson said at the time.