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Microsoft Paints CRM Landscape On Lately A ‘Still Nature’ Business Applications Scenery Part 2: Challenges and User Recommendations

Written By: Predrag Jakovljevic
Published On: August 16 2002

Microsoft Paints CRM Landscape On Lately A Still Nature' Business Applications Scenery

Part 2: Challenges and User Recommendations

P.J. Jakovljevic - August 16, 2002

Event Summary

On July 11, Microsoft Corporation (NASDAQ: MSFT), the largest software company in the world, fleshed out the contents of its recently pre-launched Microsoft Customer Relationship Management (Microsoft CRM) offerings for the mid-market, together with an indication of pricing. Earlier this year, the company indicated that it planned to deliver a CRM solution specifically aimed at medium-sized organizations.

Nevertheless, Microsoft's ambition will be its greatest challenge too, as the company has concurrently experiencing another almost disruptive technology transition similar to the transition from character-based DOS to graphic-based Windows OS platform on the PC-based infrastructure of early 1990s. Nowadays, it is about the transition from Windows to .NET, using Internet rather than PCs.

While the company has been engrossed in a gigantic task of transforming Internet from a presentation-only to a programming medium as well by promoting open standards based Web Services (see Liberty Alliance vs. WS-I; J2EE vs. .NET; Overwhelmed .YET?), its applications competitors/partners have solely been focused on their core competencies (i.e., product functional footprint). Therefore, given their access to the same technologies, it is no wonder that many other vendors have delivered their products leveraging .NET and other Microsoft technologies much sooner than Microsoft itself (see Epicor Claims The Forefront Of CRM.NET-ification).

This is Part Two of a two-part note on Microsoft CRM. Part One detailed recent announcements and discussed the Market Impact.

Challenges

On its hand, Microsoft Business Solutions is now up to its gills with soul-searching dilemmas, possibly with more issues than it would wish to be handling at the moment. With the addition of Navision's array of applications, some of which had long been direct competition to the Great Plains products and with many products still leveraging proprietary toolsets, the division will have a challenge to figure out how to leverage the installed base of over 260,000 customers and how to avoid impending products/geographies conflicts in over 4,000 combined partners.

While MBS gets distracted by its efforts to provide a clear and concise product roadmap for partners and prospects, as to neutralize significant overlaps in the applications and a hefty cost to maintain and enhance the products, as well as a danger of the brand dilution/confusion to prospective buyers, other vendors will use that time to perfect their functional differentiations. It is not that inconceivable that the competitors will come up with their products' Outlook integration (which is current Microsoft CRM strong selling feature) and will further establish their expertise in some vertical industries.

Additionally, the word processor/spreadsheet analogy presented in Part One should not necessarily be repeated in the case of the CRM market, given the different nature and complexity of the product groups. While small enterprises desire products and services designed, priced and delivered from vendors that understand their needs and are focused in that regard, Microsoft would definitely not be the only one that fits the picture. However, the functional, process, and integration requirements of a small-to-mid-market company can be just as sophisticated as those of a large enterprise, particularly if it is a multinational entity. While mid-market companies incline toward effectively packaged applications that are easy to use, require less skilled resources, and are reasonably low priced, the idea that mid-market companies should settle for a pure-vanilla CRM implementation is a fallacy.

Thus, such mid-market CRM vendors as Onyx, Best Software/SalesLogix, Pivotal, Kana, and E.piphany might have thereby acquired another lease of life extension in the short term to redefine their value proposition, especially given that some have recently secured new funds and/or found a solace in a partnership with IBM.

The competition from Microsoft is likely to immediately affect the prominent players in the lower-end of the market, including FrontRange (the GoldMine FrontOffice product), Epicor Software (the Clientele product), Multiactive Software (the Maximizer Enterprise products), and some of the existing MS Outlook-based CRM providers like Oncontact Software, Multiactive Software, and WorldTrak, as well as hosted providers Salesforce.com or UpShot. Although not very soon, all the above-mentioned will be affected in the long run, as new functionality and product maturity make Microsoft CRM more amenable to the higher-end of the market segment opportunities.

In addition to the likes of SAP, Oracle, Siebel, PeopleSoft and J.D. Edwards, which are still above MBS' radar screen (Microsoft is not to be blamed for their lower-end of the market recent aspirations), endangered exceptions though might be the vendors with established integration with back-office systems that also feature strong functionality in certain manufacturing industries (see some examples in Mid-Market ERP Vendors Doing CRM & SCM In A DIY Fashion and SalesLogix and ACT! Officially Branded As Best Software). Still, no one should be too relaxed, as MBS will breathe their necks down, sooner or later.

User Recommendations

Small and medium size businesses using Microsoft Great Plains (and possibly Navision) back office applications and smaller organizations using Microsoft desktop and office applications that have simple CRM product needs (simple sales & marketing, and basic customer service activities) and interest in Web Services should pay attention to this news. They should evaluate the above CRM functional enhancements as a way to add value to their existing applications although bearing in mind that other vendors currently offer mature products. These companies should consider adding the announced functionality to their requirements list, as to secure value in terms of both cost savings and increased efficiency. Approach Microsoft to clarify for you the subtle differences (and likely functional overlaps) between Microsoft CRM and other small business CRM products the company offers.

The fact remains that the product will likely not appeal to companies that need more complex CRM capabilities or must manage customer relationships through diverse lines of business (LOBs) at this stage. These customers would most likely require extensive customization, for example building workflow managed processes to align sales teams by territory, product line or campaign. Moreover, the enterprises that have integration needs outside of the Microsoft environment, have complex sales and call-center service business practices, or need advanced CRM functions such as product configuration, content management, personalization and relationship optimization, will have to look at more sophisticated offerings mentioned earlier.

Moreover, due to the likely product immaturity small businesses with less than 100 employees should consider other products until 2003 in North America and in 1Q04 in the rest of the world. Also, bear in mind that the first release of Microsoft CRM will not provide tight call-center integration or permit significant application customization, and it should not be short-listed by larger or more complex enterprises, with multiple-platform and strong scalability requirements.

On a more general note, CRM Vendors' domain expertise pertinent to industry-specific business processes (e.g., claims processing for insurance companies, service provisioning for telecommunications, billing for utilities) has been a key success factor (KSF) of application implementation and reducing upfront need for application customization. The enterprises should therefore challenge vendors to demonstrate breadth and depth of their vertical expertise and to demonstrate support for vertical business processes and rules through both product functionality and underlying technology.

 
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