January 21, Microsoft Business Solutions (MBS),
a division of Microsoft Corporation (NASDAQ: MSFT), announced
the long awaited North American general availability of Microsoft Business
Solutions Customer Relationship Management (Microsoft CRM).
The product's availability happens almost a year after the initial announcement
of Microsoft's own CRM product intent (see Microsoft
Throws .NET At SMEs, With CRM As Bait), and almost a half year after the
more fleshed out Microsoft CRM strategy blueprint (see Microsoft
Paints CRM Landscape On Lately A 'Still Nature' Business Applications Scenery).
The product's delivery date had meanwhile taken even a slight setback, given
it was initially anticipated for the end of 2002 and given the date was maintained
and publicized as late as during the Stampede conference for
value added resellers (VARs) last fall (see Microsoft
Lays Enforced-Concrete Foundation For Its Business Solutions), only to be
subsequently (and somewhat embarrassingly) postponed in the nick of time, and
justified by the apparent need to perform additional testing and quality assurance
Given the magnitude that Microsoft has placed on the CRM product introduction, it was indeed much wiser to take some negative publicity for a slight delay (it was a first release product rather a long-needed upgrade with key enhancements anyway) rather than to deliver a product that would be half-baked for the market. The latest press release virtually confirms that the product's functionality does not lack the previously touted features.
is Part One of a two-part note.
Two will continue to discuss the Market Impact and will make User Recommendations.
a familiar and intuitive user interface, and accessible through Microsoft
Outlook and as a browser-based application, Microsoft CRM is devised
to enable small and medium enterprises (SMEs) to devise their CRM strategies
and to thereby build lasting and more profitable customer relationships through
increased sales effectiveness and consistent customer service, as the product
offers an up-to-the-minute view of interactions from initial lead through lifetime
customer history. To that end, sales teams have integrated, up-to-date information,
facilitating better work in team environments, increasing efficiency and ultimately
improving the customer experience, whereas customer service employees are armed
with a solution that helps meet a greater number of service agreements and provides
higher customer satisfaction.
touts that the product is designed for rapid deployment, ease of use, and integration
with Microsoft Office and MBS' back-office solutions (although
the latter only gradually in the future, starting with the integration to MBS
Great Plains product expected by the end of Q1 2003). Consequently,
the solution should enable businesses to take advantage of technology and related
services that were previously reserved for large enterprises with big IT budgets
only. Microsoft CRM is also the first Microsoft business application built on
the Microsoft .NET infrastructure, supposedly facilitating
a simpler connection of disparate systems and enhancing integration with external
Web services such as credit checking, analytics and marketing automation services
that extend the core functionality of the solution. The flexibility built into
Microsoft CRM reportedly allows mid-market businesses to determine the degree
to which they want to automate and share information across their organizations.
product comes in two flavors: 1) Microsoft CRM Professional Edition,
which enables more complex CRM functionality including work-flow rules, customization
and back-office integration with enterprise resource planning (ERP) systems
via Microsoft BizTalk server, and 2) Microsoft CRM
Standard Edition, which provides a range of basic CRM functionality
for a stand-alone CRM environment without extensive business automation and
integration requirements. Both will reportedly be distributed and implemented
by Microsoft Business Solutions CRM-certified reselling partners. Microsoft
CRM Standard Edition will also soon be available to reselling partners in North
America through a key distributor, Ingram Micro Inc., while
additional distributors will be announced over the next few months.
Microsoft CRM is available for purchase in North America only for the time being. Estimated retail pricing for Microsoft CRM ranges from $395 per user, plus $995 for the service or sales servers for the Standard Edition, to $1,295 per user, plus $1,990 for the service and sales servers for the Professional Suite Edition. The product is available as an on-premise solution or as a hosted solution through select resellers. The North American version of Microsoft CRM is not available for purchase outside the US and Canada at this time, but localized versions of Microsoft CRM for the Europe and Middle East, Asia-Pacific and Latin America markets are reportedly being developed and are scheduled for release in the second half of 2003, with the support for English, Danish, Dutch, French, German, Italian and Spanish languages, and multiple currencies.
Applix Acquisition By Platinum Equity
or not, on January 23, Applix, Inc., (NASDAQ: APLX), a global
provider of analytic and CRM business solutions, announced the sale of its CRM
part of the business to Platinum Equity, LLC (www.peh.com)
a global organization specializing in the acquisition and strategic operation
of technology companies. Under the agreement, Platinum Equity is acquiring Applix's
CRM business, related intellectual property and approximately 1,000 customers.
On one hand, the transaction should supposedly allow Applix to focus all of
its resources on its recently reestablished core business in the reportedly
rapidly growing Business Performance Management (BPM) market, while; on the
other hand, it should enable Platinum Equity to immediately increase its presence
and customer base in the CRM market.
iCRM suite is a web-based collaborative solution that optimizes and
integrates local and disparate operations for marketing, sales, customer service,
partner management, quality assurance, help desks and internal IT organizations.
To that end, it includes Applix iHelpdesk, Applix iSales,
and Applix iService components, all based on the company's
iEnterprise platform, which provides a multi-tier, scalable
architecture featuring an object-oriented, eXtensible Markup Language (XML)-compliant
"Developer's Studio" development environment, a central data schema for all
Applix iCRM modules, a wizard-driven business rule generator, and Applix
Weblink 2000, an e-business extension that can easily deploy applications
to employees, customers and partners via browser-based clients and wireless
consideration for the transaction was approximately $8.75 million, consisting
of $5.75 million in cash and the assumption of approximately $3 million in net
liabilities by Platinum Equity. A portion of the sale has closed, while the
sale of the Germany operations is expected to close in approximately 4 to 6
weeks, pending receipt of German antitrust approval. At the first closing $4.25
million was reportedly paid and a $1.5 million payment is due at the closing
of the German portion of the transaction. First Albany Corporation
acted as financial advisor to Applix in connection with this transaction.
The CRM market remains both the land of opportunity but with many treacherous patches of quicksand for those that are not certain about their charter in the field. One should not question Microsoft's rationale to intrude the CRM market given its MBS division's product arsenal and the ongoing biggest R&D investment within the applications market, and given its attempts to leverage the abundant SME arena, where CRM awareness and penetration is possibly far less than 10% in the lower end of the spectrum. Moreover, Microsoft has long sowed its seeds in this market segment that will have likely standardized on its technical infrastructure, evidenced by over 90 million Outlook and over 250 million Office users.
Also, since Microsoft has long earned strong brand recognition 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 150 users to at least readily consider (if not adopt straight away) 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 CRM solutions at somewhat discount prices but also with no modifications clause and a plethora of disabled functional features. On the other hand, nifty mid-market CRM products without the integration to the already installed ERP systems have not cut muster either, given the payment and shipment transactional history should also be an inherent part of the customer relationship management, which are impossible to handle without direct integration between, e.g., CRM sales automation or contact management modules with traditional accounts receivable, accounts payable and inventory management core-ERP modules.
Microsoft CRM product initially focuses on two intrinsic CRM modules sales
and service automation/management while the third part and parcel' module,
marketing automation, is slated for future releases. To that end, the Professional
Edition functionality includes basic contact management (i.e., interaction and
opportunity aspects) 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, and Microsoft CRM might change the landscape for CRM among conservative
manufacturing SMEs that have so far been dismissive of either over-functional,
too rigid and highly priced products on one side, or of inadequate inexpensive
products on the other hand. Therefore, an affordable, straightforward out-of-the-box
application with minimal implementation risk and innate integration to Outlook,
web browsers, and Microsoft Exchange server will likely strike
a chord with this market segment.
notable feature would be .NET SmartTag technology, which should
allow users to easily incorporate structured and unstructured information, or
information from multiple systems, into a single document (e.g., crating requests
for quotes (RFQs), dunning letters, purchase orders, and other common business
documents should be rendered simple). It is very likely that the embedded .NET
framework and its notion of a next-frontier technology could become a stronger
selling point than the mere functionality.
Applix, however, may exemplify the other side of the CRM medal, as some smaller pure CRM vendors have been hard pressed to survive owing to the combined effect of CRM users' disenchantment with the products' hardly ever materialized benefits, after a hasty infatuation with its touted silver bullet' mantra (which once also happened to its older sibling ERP's users), compounded with the tight IT budgets due to the worldwide economic recovery delay and with Microsoft's entry into already crowded place.
Although many mid-market pure-CRM solutions have been maturing and improving, they must continue to facilitate integration with back-end systems, given the increasing awareness of this need for full-fledged benefits of CRM. Further, they must also provide the differentiation through verifiable return on investment (ROI) metrics, and indispensable features and functions germane to selected industry verticals. Despite these niche vendors' attempts to overcome these challenges, many will continue to struggle to avoid insolvency, while the luckier ones that have some attractive point solutions (e.g., partner relationship management (PRM) or portal solutions) that large enterprise vendors would gladly incorporate will become acquisition targets.
seriousness of these vendors' predicament might be well depicted by the Applix'
departure, given the vendor had a solid CRM product breadth and technology foundation,
a good implementation track record with nearly 1,000 satisfied customers, and
some notable endorsements from ERP vendors that have been remiss in delivering
their own CRM offerings (see SSA
GT Beefs Up BPCS V8 Through Partnerships' Spree and Geac
Trying Its Luck in Partnering). Many pure-CRM players that cannot boast
the above traits should do their own math and analyze the raison d'etre' of
their independent existence within the CRM battleground.
that end, this might have been the right move for Applix, given its analytic
market origins, and given the additional cash influx from the sale the lighter'
Applix will now leverage to bolster its BPM capabilities and to accelerate its
plans to bring additional analytic applications to market. In 2002, the vendor
launched many applications for interactive planning and service analytics, such
as the initial release of Applix Interactive Planning product,
which manages a company's budget and financial planning process. When it runs
on the Applix Integra platform, users should be able to construct
a real-time planning, budgeting, forecasting and business modeling suite that
should provide financial analysts with some clout in managing the business and
financial tradeoff decisions all companies must continually make.
is built on a foundation of Applix iTM1, the renowned real-time
Online Analytical Processing (OLAP) business intelligence (BI) engine that Applix
acquired in 1996, on which many third-party analytic applications are also based
(for more information, see Applix
Still Shows a Presence in the OLAP Market). Consequently, Applix' choice
of the BPM alley is logical, especially with the growth rates that competitors
in this space have been boasting lately, which can be partly attributable to
the current climate that urges the Security and Exchange Commission (SEC) financial
reporting compliance and makes the BPM a low-hanging fruit area.
concludes Part One of a two-part note.
Two will continue the Market Impact, including discussion of the Challenges
both Microsoft and Applix face and making User Recommendations.