Paints CRM Landscape On Lately A 'Still Nature' Business Applications
- August 15, 2002
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 (see Microsoft
Throws .NET At SMEs, With CRM As Bait), having already made strides
in this prospective and underserved area of business application software,
with the April 2001 consummation of purchase of former Great Plains
Software at the end of 2000 (see Microsoft
And Great Plains - A Friendship That Turned Into A Marriage) and a
recent announcement of purchase of Navision Software (see Microsoft
'The Great' Poised To Conquer Mid-Market, Once and Again).
presentation featured David Thacher, general manager of customer relationship
management (CRM) at Microsoft Business Solutions (MBS),
the new name for the combined Microsoft division, which includes Microsoft
Great Plains, Microsoft bCentral, and Navision a/s businesses.
Thacher spoke about the upcoming release of Microsoft Customer Relationship
Management (Microsoft CRM), a solution developed for mid-market businesses.
He also explained Microsoft's overall CRM strategy, its value proposition,
Microsoft's ongoing support for partners and resellers, the strength of
the MBS channel, and the increasingly important role of Web services in
the CRM industry. Thacher pointed out that .NET facilitates the
easy connection of systems and enhances solutions with external Web services
such as credit checking, analytics and marketing automation services that
extend the core functionality of Microsoft CRM.
is Part One of a two-part event note on Microsoft CRM. Part Two will discuss
the Challenges faced by Microsoft and make User Recommendations.
Microsoft CRM demonstration focused on the solution's tight integration
to Outlook and Microsoft Business Solutions' business applications,
and attempted to show how easily customers can use and customize the solution.
Microsoft CRM complements (and possibly overlaps with) a plethora of Microsoft's
other CRM offerings for small and medium-sized businesses, including bCentral
Customer Manager and DealerPoint, Microsoft iCommunicate,
Microsoft Great Plains eEnterprise Field Service, Microsoft
Great Plains Solomon Field Service and Great Plains Siebel Front
Office. Likely the most prominent amongst these would be Microsoft
Great Plains' CRM functional offering, provided by an interface with Siebel
Systems and called Great Plains Siebel Front Office (SFO). It was
aimed mostly at companies that were existing users of Great Plains' enterprise
systems, such as Solomon or eEnterprise, and it provided
field service, and lead and contact management with an element of connectivity
to those back-office systems.
CRM solution will be used as a standalone product or integrated with Microsoft
Business Solutions' Microsoft Great Plains business applications: Dynamics,
Solomon and eEnterprise and eventually Navision Attain and
Axapta. Its expected availability in North America is in the fourth
quarter of 2002 (it will be available for beta test from August), while
the availability outside of North America will be phased and is expected
to begin in the first quarter of 2003. It will be sold and implemented
through MBS' reselling partner channel, and partners and Microsoft Great
Plains' award-winning customer support team will provide support.
solution will be available on-premise or as a hosted solution through
select partners. The software will be accessible either through a browser
or through Outlook, and businesses will also need either Windows 2000
or Windows NT Server software, as well as the SQL Server 2000
database and Microsoft Exchange and Active Directory in order to
use the e-mail and messaging functions.
CRM will have a straightforward yet flexible licensing model that allows
companies to purchase what works best for them. They may choose among
Sales, Service or Suite licensing at Standard
or Professional levels of functionality. The main difference between
the two levels is that the Professional edition will offer more elements
of workflow and integration with back-office applications than the Standard
package. The capabilities have been designed specifically with small organizations
in mind, from 25 to 500 employees, having 15 to 150 concurrent CRM users.
Microsoft CRM carries a pricing model designed to encourage companies
that previously considered CRM systems unaffordable to start systems and
expand them as their businesses grow. Pricing for Microsoft CRM ranges
from US$395 per user plus US$995 for the server for the Standard Sales
level to US$1,295 per user plus US$1,990 for the server at the Professional
in June, as a part of rounding out of its CRM strategy, then Microsoft
Great Plains Business Solutions and Crystal Decisions Inc., a privately
held provider of information management systems, announced that Crystal
Decisions will provide the reporting, analysis and information delivery
capabilities within Microsoft CRM. The new OEM and reseller agreement
will give Microsoft CRM customers access to Crystal Enterprise to gain
insight into their customer data, identify high-value opportunities, predict
short- and long-term revenue, and distribute information across their
organization for better decision-making. Crystal Enterprise enables
businesses to access data from virtually any data source or application,
analyze it, create a report, and share the information with employees,
customers and partners.
integrated with Microsoft CRM, Crystal Enterprise should deliver insight
into customer data through a combination of operational and analytic reports,
enabling companies to understand what is happening in their customer base
and why. The agreement includes an OEM component through which a version
of Crystal Enterprise, called Crystal Enterprise for Microsoft CRM,
would be installed by default at no additional cost, providing customers
with the ability to view, filter, print and export 125 predefined reports.
The agreement also includes a worldwide reseller component through which
Microsoft will resell enhanced Crystal Enterprise for Microsoft CRM licenses
(for customers seeking to customize existing reports or create new reports),
Crystal Reports Standard (with a custom data driver for Microsoft CRM),
and other Crystal Decisions offerings, such as training and support, through
its value-added reseller channel.
on July 11, Microsoft announced that it has completed the acquisition
of Navision Software a/s as a result of the successful close of the tender
offer. Microsoft expects to purchase Navision's shares for approximately
US$1.45 billion in stock and cash. Including the purchase of Great Plains
in 2001, Microsoft has forked out more than $2.5 billion to become a major
player in the SME applications market.
a result of the acquisition, originally announced on May 7, 2002, Navision
will become part of Microsoft Business Solutions, which will be led by
Doug Burgum, senior vice president of Microsoft and former chairman and
CEO of Great Plains. Navision co-CEOs Jesper Balser and Preben Damgaard
will remain with Microsoft Business Solutions. Balser will become director
of global strategy, and Damgaard will become director of Europe, Middle
East and Africa (EMEA) operations. The EMEA operations will be based out
of Navision's corporate headquarters in Vedbaek, Denmark. MBS will continue
to develop, market and support Navision's business applications. These
applications — Microsoft Navision Axapta, Microsoft Navision
Attain, Microsoft Navision C5 and Microsoft Navision XAL
— join the portfolio of products currently offered by Microsoft Business
Solutions. The MBS' focus going forward will likely be on rationalizing
and defining the future of its product portfolio and value-added reseller
(VAR) partner network.
Microsoft's abilities at your peril. Although the Microsoft CRM product
will not have all the bells-and-whistles of some incumbent CRM products
any time soon, that will likely happen some time down the track. Those
who laughed at the early releases of MS Word or Excel will
now have real trouble finding widespread use of the then stalwart word
processor and spreadsheet products WordPerfect and Lotus 1-2-3.
is a no-brainer that Microsoft is getting quite serious about the enterprise
applications market; evidenced by its MBS division (just by the sheer
magnitude of these acquisitions' costs, let alone by the ongoing biggest
R&D investment within the applications market), and by its attempts to
cultivate the fertile small enterprises ground, where CRM penetration
is far less than 10%. Moreover, Microsoft has long sowed its seeds in
this market segment that will have likely standardized on Microsoft infrastructure,
evidenced by over 90 million Outlook and over 250 million MS Office
users (excluding the pirated copies).
since Microsoft has long earned strong brand equity and accompanying user
loyalty within the small business market segment with its other desktop
and office networking applications, one should expect firms with less
than 100 users to readily adopt Microsoft's simple, Outlook-centric CRM
software. These markets are at the early stages of adoption, which creates
large opportunities for aspiring CRM vendors that approach the markets
with the right products and messages. These customers have been loath
to deploy mutilated' large-enterprise solutions at discount prices or
with no modifications clause and a plethora of disabled functional features.
MS CRM product's functionality includes basic contact management (interaction
and opportunity) as part of Sales Force Automation (SFA), simple e-mail
based marketing campaign tools, and call management (customer service
ticket queues) with a basic customer service knowledge base, content authoring
and approval workflow. These features are what the targeted customers
likely need at this stage. An affordable, no-frills out-of-the-box application
with minimal implementation risk and innate integration to MS Outlook,
web browsers, and MS Exchange will likely strike a chord with this market
most important to note is that this is the first Microsoft .NET framework-based
product proving that .NET is for real. It gives legitimacy to the platform
and to the concept of Web services, which many may still consider to be
hype and a strategy in flux. This perception may be alleviated as indicated
by a sort of a recent race in acceptance of .NET by other smaller Microsoft-centric
business application vendors. A spate of recent announcements of the first
.NET-based products delivery or of just public embracement of .NET speaks
in that regard, Frontstep, Best Software (now SalesLogix'
parent), Made2Manage, Epicor Software, and Scala
being only a few.
appears that Microsoft intends to build a common foundation framework
on top of .NET that will serve as an integration platform for vanilla'
application components stemming from MBS, which will then be enhanced
vertically or in any other way by third-party vendors. Even though the
product is currently positioned as an add-on to Microsoft Great Plains
products (and eventually for Navision), its Web Services-based architecture
and embedded BizTalk Server might render it connective with other
applications (even with competitive accounting products like QuickBooks
and DacEasy), and it will also be sold as a stand-alone application,
all increasing the opportunity.
Microsoft will try to downplay (and possibly even initially curb) its
desire to compete in the higher-end of the enterprise market for the time
being, major players in the market cannot rest completely at ease. The
fact that after the initial announcement of Microsoft CRM, many mid-market
CRM and other applications vendors defensively rushed to shrug off any
possible ramifications on their future business, might indicate that they
are not that indifferent after all. And they should not be, especially
those with dwindling resources and without much differentiation traits
(e.g., established vertical industry expertise or local geographical leadership),
given Microsoft's intention to also deliver soon easy data migration options
from competitive product like ACT! and GoldMine.
for Microsoft to become an up-and-coming powerhouse in the overall enterprise
applications market, not just in the CRM niche. True, to accomplish that
feat, Microsoft has yet to concurrently garner sufficient experience in
the enterprise level business application market, a vertical industry
savoir-faire', and in notable system integration partnerships, and, consequently,
it has not developed a strong mind-share among the C-level executives
(decision makers) at the larger corporations.
the chances that the giant will remain content for long with the current
capabilities are very slim. With the base product and a strong development
and marketing team and MBS' extensive sales channel in place (4,000 partners,
with nearly 1,000 trained CRM partners), Microsoft plans to incrementally
add product catalogs, sales quotes, pricing, marketing encyclopedia, pipeline
management, forecasting, sales contracts, and CTI (computer telephone
integration) functionality. Also, future releases will feature a customer
portal to provide access to the knowledge base, Frequently Asked Questions
(FAQ), visibility into open customer call inquiries, and a storefront
that provides order visibility through integration with MBS' products.
deal with Crystal Decisions would be another move in the right direction
to embed business intelligence (BI) tools and reporting capabilities
into enterprise applications, and thereby mask their intrinsic complexity.
Enterprise applications have always been great repositories for transactional
data but have traditionally rarely provided useful actionable information
to end users on an exception or any other as needed' basis. While larger
enterprises have been solving the conundrum by building extensive data
marts and data warehouses and by deploying analytical tools atop of these
to provide the advantages of BI to their users, their smaller counterparts
have been working around itwith more or less useful report writers, and
that is going to change in the future.
does not take a genius to realize that over time and with these features
in place, the Microsoft CRM product might appeal to the more sophisticated
prospects as well, as it should offer better Total Cost of Ownership (TCO)
due to the native integration to the Microsoft technology pile and the
rest of the MBS product portfolio, all founded on the .NET framework.
Ultimately, due to users familiarity with Microsoft's desktop applications
look and feel, user companies might start doing away en masse with traditionally
cumbersome user interfaces of enterprise systems in favor of Outlook-like
UI's or of Microsoft SharePoint portal, relegating enterprise systems
to the less visible infrastructure level.
the Siebel/Great Plains partnership will be the first to feel some
strain and discomfort although the alliance has been successful, evidenced
by over 500 joint customers so far, out of over 1,100 Microsoft Great
Plains' CRM customers in total. The reality is that both products will
be competing in the same channel partners network sooner or later, rendering
the alliance dissolution as a not impossible outcome.
concludes Part One of a two-part note on Microsoft CRM. Part Two will
discuss the challenges faced by Microsoft and make User Recommendations.