Microsoft CRM Release Hits Speed Bump

Ryan Naraine

Updated · Dec 18, 2002

Microsoft’s eagerly-anticipated entry into the
mid-market CRM market has hit a speed bump with technical hiccups pushing
back its release to resellers.

Microsoft is still on track to send a release candidate of the CRM suite
to manufacturers before December 31 but difficulties with front-end and
back-end integration mean wider distribution to OEMs and resellers won’t be
available until early February.

Microsoft officials could not be reached at press time to discuss the
delay in widespread distribution but a statement out of the company’s
business solutions unit hinted subtly at some quality issues. “(We are)
committed to the highest standards and dedicated to delivering a product
that best meets customers’ needs,” said general manager David Thacher.

Beta testers told the code had issues with
back-end integration, a key feature in the company’s plans for the CRM

“The beta product didn’t do any integration to the back-end. We’re told
the general release would have integration so I’m not surprised there may be
some delay because we know that Microsoft’s plans have been very aggressive
(about that integration),” said Ben Holtz, president of Mass.-based CRM
consultants Green Beacon Solutions.

He said Green Beacon never beta-tested the back-end capabilities of MS CRM.

Holtz said the code is “solid enough” to ship immediately although he
expects add-ons to be a staple in future releases of the product suite.

“We’re excited about what this is going to do for the mid-market space.
This will expand the marketplace significantly because of Microsoft’s sales
and marketing. It creates all kinds of new markets for CRM at the low end
of the mid-market right up to the high-end,” Holtz added, noting that
customers have “responded very well” to beta tests of the CRM suite.

With competitors like IBM and PeopleSoft paying close
attention to the rumblings from the Redmond-based software giant, the
earliest date for Microsoft’s CRM release to vendors and resellers won’t be
until early February.

The CRM suite reportedly has trouble integrating with the Small Business
Suite, which was part of the massive Great Plains acquisition that gave
Microsoft it’s first foothold in the market. Because it has trouble
integrating with recently-revamped Small Business Manager 7.0 accounting software, Microsoft
will be patient about a final release, industry watchers say.

Holtz believes the product can potentially ship without the back-end
integration but he doubts the software firm will go that route. “I’ll be a
little surprised if it ships without that integration but it’s important to
note that this isn’t Outlook or Office XP. This isn’t a product that is
going to sell millions and millions of copies in the first month. This will
be slow and we expect them to upgrade it as time goes by,” he explained.

Already, Holtz’s Green Beacon Solutions has built five add-ons for the
CRM suite, including a Web interface, a forecast management tool and a
relationship engine. “We expect a number of add-ons to come down the pike.
The reality is that, in the first month, this will ship to less than 100
customers. (This release) won’t be the end-all of Microsoft CRM,” he added.

Microsoft has attacked the enterprise resource planning (ERP) mid-market
with a vengeance since acquiring
Great Plains in December 2000 in a $1.1 billion all-stock deal. The move
marked Microsoft’s first foray into a new business area since 1995.

Microsoft is expected to have its biggest impact at the mid-market and
will go head-to-head with Armonk, N.Y.-based IBM in the lucrative

IBM Global Segment Executive Michelle Wells told
that Big Blue was well-positioned to stave off the challenge from Microsoft
because it won’t be selling applications. “We are not in the applications
business. Back in 1999, we made the decision that we were not going to
compete with ISVs. We were going to partner with them. We’ll deliver the
infrastructure to deliver the applications,” she said of IBM’s approach to
marketing its mid-market CRM suite.

Wells said the open-source embrace adopted by IBM would also be a trump
in the CRM race. “Customers underestimated the cost to integrate CRM
applications with their existing back-end infrastructure. Now, they want to
make sure the back-end is built on open standards to make sure they can
integrate with any applications,” she added.

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