SugarCRM is an IBM darling. They received good billing at IBM Lotusphere and they are getting it again here at IBM Websphere.

Today came the news that IBM is giving up on its massive project to implement Siebel Systems and is turning to Sugar CRM for what is billed as the world’s largest CRM implementation.

ZDNet reports that IBM had the largest Siebel implementation in the world and now appears to be diligently unraveling it for SugarCRM and a system called Sales Connect.

But why?

It has to come down to the relationship that SugarCRM has forged with IBM. It’s a joint solution that has Sugar CRM running on IBM systems for sale to end-customers. SugarCRM is also open and runs on DB2 database technology. It integrates Lotus Notes. It connects with social networks.

There is the added benefit that IBM can install it on-premise. For such a large installation that just makes sense. The cost could be considerably more by using a SaaS such as Salesforce.com.

Further, Siebel is plain awful. And it’s Oracle.

What a coup for Sugar CRM.