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Microsoft releases CRM 4.0, gears up for 2008, competition

As CRM buyers look to consolidate, replace or install CRM, Microsoft is banking on usability and multi-tenancy in 2008. Yet users should take care which companies they buy from.

As promised, Microsoft yesterday released to manufacturing the latest version of its CRM product before 2008.

With industry observers predicting a year when businesses will standardize on one CRM platform and replace legacy systems, Microsoft is counting on the new version to maintain momentum and remain a competitive offering in the market. But it faces challenges in selling CRM to business users rather than IT through its reseller channel, a hurdle many existing vendors have struggled with already.

Code-named "Titan," Microsoft Dynamics CRM 4.0 is available on-premise and partner-hosted. The on-demand version hosted by Microsoft is dubbed Microsoft CRM Live. All versions are built with a unified code base, allowing customers to choose their model and change over time if needed.

"Microsoft Dynamics is making the power of choice a reality for businesses around the world," said a statement from Brad Wilson, general manager of Microsoft Dynamics CRM. "This new release further enables us to deliver on Microsoft's software-plus-services strategy and provide our CRM solution with a great user experience and exceptional business value."

Microsoft previewed the new user interface (UI) at its Convergence conference in March. It features tight integration with Outlook, allowing users to work from within the ubiquitous email client as well as through a browser window. The release is also Microsoft's first version on a multi-tenant architecture, allowing multiple users to run off the same server.

Will Microsoft win, place or show?

The enterprise CRM market has essentially become a three-horse race between San Francisco-based Salesforce.com, Siebel (along with PeopleSoft, now owned by Oracle), and Microsoft, according to Richard Smith, vice president and CRM practice director at Green Beacon Solutions, a Watertown, Mass.-based value added reseller. Smith predicts that 2008 will be a big year for CRM as companies look to consolidate, upgrade or move off CRM systems they have outgrown. @45981

"The big unknown we're seeing is around Microsoft, which is not traditionally a player in the enterprise space for CRM," Smith said. "Version 3 started to get them into more enterprise customers. With some of the functionality they've added, we've certainly seen large customers evaluate Microsoft because of the multi-language, multi-currency, and integration capabilities and the customization framework they offer."

Microsoft Dynamics CRM 4.0 offers more than 25 languages.

Microsoft saw significant momentum with its 3.0 product. Users seemed willing to wait after it released its 1.2 product (Microsoft went straight from 1.2 to 3.0). In fact, according to Technology Advisors, a Chicago-based CRM consultancy, it may have seen a little too much momentum. Microsoft may have the functionality down, but it's running into problems with its partner deployments. Currently, 75% of Technology Advisors' business comes from helping with mishandled Microsoft CRM deployments.

It's the network

"There are hundreds of [Microsoft] networking partners who are selling CRM, and they don't know how to implement CRM," said Sam Biardo, CEO of Technology Advisors. "They think it's like installing SharePoint. They roll it out, nobody's happy with it, and now a lot of users are shopping around asking: 'Why isn't this working right?'"

It's a lesson that's been learned before. Early failures in enterprise CRM often came about partly because projects focused on CRM as an IT issue, not a business issue. Still, Biardo has high hopes for 4.0. "Everyone says Microsoft gets it right on the third try," he said.

Technology Advisors has been a Microsoft CRM partner for two years and has done about 15 Microsoft deals.

"Every product has good and bad points," Biardo said. "At the end of the day, the biggest challenge we've seen is the fact that people have bought 'em from the wrong guy. It's like going to your plumber and saying I need you to build out my basement. That's what people are doing, and they don't understand why the basement doesn't look that good."

Smith said he's seen a similar effect with Microsoft CRM.

"It's part of the problem of the Microsoft model," Smith said. "A lot of people are trying to sell Microsoft CRM as an add-on. They'll say, 'You bought an Exchange server, do you want CRM with that?' That only works when a) it models the client's business process, and b) when users get trained and the data's connected. Most of what we think of as the classic networking partners do not have the depth to do that."

No hot product

Green Beacon Solutions, which traditionally serves upper midmarket and smaller enterprise customers, has seen a shift in thinking about Microsoft in its client base and is considering the new CRM package as a viable alternative. Still, Smith said there is no "hot product" for 2008. Some organizations that can't get salespeople to use Siebel are looking to more usable products. Some that feel locked in to on-demand products like Salesforce.com and are seeing the monthly per-user fee rapidly increasing as they add modules are thinking of switching, and others are hoping to replace legacy systems.

"That's creating opportunities for all of these vendors to get in," Smith said. "Users are saying, 'Which one of these top three is the right move for us?' There's not a clear answer. Not everyone is moving to Salesforce or Microsoft or Siebel."

Standardizing on one CRM platform has been a major focus of CRM users recently, particularly those running SAP and Oracle/Siebel applications, agreed Rob Bois, analyst with Boston-based AMR Research. SAP recently launched its latest CRM application, SAP CRM 2007, and has put a focus on usability and is offering an on-demand option in hopes of persuading customers to stay with its products.

"There have been a lot of SAP customers who are also Microsoft customers, and they've looked at Microsoft CRM and Salesforce.com because those applications are usable, more user friendly," Bois said. "Now, with 2007 coming along with a much better UI, it could definitely keep more companies in the SAP family."

For new CRM buyers, the options are a little wider.

"In terms of net new CRM buyers, I think Salesforce.com still can be very appealing, especially if it's not a Microsoft shop -- frankly they're so ubiquitous they get so much attention from a marketing standpoint," Bois said. "[Salesforce.com] sells very effectively into line of business, which is kind of a new concept for Microsoft and SAP. Microsoft still appeals to organizations that are having a lot of trouble getting anybody outside of Excel and Outlook using CRM."

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