Will Great Plains Cause Great Pains?

Microsoft is making a bold move into the customer relationship management (CRM) market, and the question being asked in executive
suites at established CRM companies across the country is simply: “Will Microsoft Great Plains cause Great Pains?”


Anytime the Redmond, Wash.-based software giant starts eyeing your
bread-and-butter business, it’s bound to cause more than a little
nervousness.


“Whenever the big guys (SAP, Oracle, Microsoft) focus on anything,
competitors should be concerned,” said Larry Goldman, vice president of
Chicago-based Braun Consulting.

“Ask Netscape,” he proclaimed.

He added that Microsoft puts together “very user-friendly software that
cooperates with much of the desktop software and a standard look and feel.
You would be silly not to respect this type of competitor.”


Microsoft said recently that its Customer Relationship
Management product will be available either late this year or early in 2003
via its Great Plains unit. A beta version of the software, which is being
built from the ground up using the .Net framework, is expected to be
available early this summer.


The software will be aimed at small and medium-sized businesses and will be
available as a standalone product as well as an integrated solution to
Microsoft Great Plains Dynamics, Solomon and eEnterprise. Microsoft Great Plains says
the product
will “handle the full range of sales and customer service
functions.”


Seems like it could eventually handle a full range of, ah, more competitive
functions, too. San Mateo, Calif.-based e-business applications software
provider Siebel Systems Inc. ,
which has an
integration deal with Microsoft
, would not even make a company rep
available for an interview on the topic of competition.


Instead, the company issued a terse statement saying: “MSFT and Siebel
Systems continue our successful partnership. Our CRM offerings do not compete
and target separate markets with differing needs.” Siebel 7, the latest
version of Siebel eBusiness Applications, and the Microsoft Windows 2000
Server and Microsoft .NET Enterprise Server family were integrated in the
deal announced last October.


It’s true that Siebel is one of the market leaders for CRM apps in use at
large corporations, and Microsoft says it’s going after the small- to medium-business (SMB) market.


In fact, Microsoft’s official position as stated is that “our commitment to
our partners remains unchanged. CRM partners have been briefed on our
announced CRM solutions … (and) no, we do not have plans to target the
enterprise in the CRM space.”


But already some analysts are saying that Microsoft may soon be looking to
make an acquisition in the CRM arena to serve the mid-sized enterprise
market.


One of the rumored targets is a partner of Microsoft in the CRM space, Onyx
Software Corp. in Bellevue, Wash., which was prompted to
issue a statement that said:


“Microsoft Great Plains’ future entry into the CRM market will clearly be
targeted at small businesses and small mid-market companies. As such, Onyx
believes Microsoft’s market entrance will have little or no impact on Onyx,
its market position or its existing partnership with Microsoft.”


A spokesman for Interact Commerce Corp., makers of SalesLogix, a CRM product aimed at
small and mid-size companies, told InternetNews.com that they have been
expecting Microsoft’s move “since our acquisition by Sage last May, so it’s
not a surprise.” Interact is a subsidiary of the Sage Group plc.


“The SMB space is a target-rich market with very low penetration,” said Tim
Fargo, general manager of Interact’s Saleslogix division. “We feel
Microsoft’s move into the market, validates the strategy (delivering
integrated front-office/back-office applications to small and mid-size
businesses) we have been executing for over a year with our sister division
in the U.S., Best Software. ‘Co-opetition’ is standard in the software
business. To that end, we will continue our efforts to develop within the
Microsoft platform and specifically .NET initiatives.”


Target rich or not, though, Microsoft’s entry is going to change the market,
at least in the view of former Oracle executive Marc Benioff, now the CEO of
privately held customer relationship management ASP salesforce.com.


In a memo to employees, he wrote that “Microsoft Great Plains will cause
‘Great Pains’ to the software CRM players who built their products in
Microsoft’s path. Onyx, Pivotal, Purple, Sales
Logix, and yes even Siebel, will begin to feel the pain of competing with an
undifferentiated, dated software-based solution. These software players will
be the next Borland, Ashton Tate, Lotus, and Word Perfects of CRM (they will
no longer exist).”


Benioff, a believer in the ASP approach, says that Microsoft CRM as a
software product “requires lots of different license fees — the fuel of the
Microsoft financial engine.”


His memo reminded the salesforce.com staff that the company’s technology and
business models “are differentiated as a utility.” Benioff’s memo, pehaps
aimed at bolstering morale in the wake of Microsoft’s plans to enter the
playing field, said that “if you believe as we do, that it’s the end of
software, and that the Internet will spawn utilities — then we are your only
answer.”


Not everyone believes it’s the end of software, however. Goldman at Braun
Consulting told InternetNews.com that he thinks the ASP’s value proposition
“is based on low cost of ownership and quick implementations. In the smaller
companies where IT resources are limited, this value proposition will still
resonate. But if Microsoft can be convincing that installing CRM software is
like installing Word, ASP’s might have a problem.”


And of course, many of the small fry are lining up to ride Microsoft’s
coattails.


Already ManagedOps, a Bedford, N.H.-based ASP wholesaler, has announced that
it will offer its Managed Operations outsourcing service for Microsoft’s
customer relationship management product, which was announced yesterday.


ManagedOps CEO Dan Taylor
recently told ASPnews
that while he hasn’t seen Microsoft’s new CRM
product yet, the company’s 200 reseller partners will offer the CRM software
either as an on-premise product or as a hosted application.


So clearly if you’re in the CRM game, you need to be thinking ahead.


“This will be version one of the Microsoft software while the other vendors
are very mature,” Goldman said. “These vendors need to continue to
verticalize their software for key CRM industries like telecommunications or
financial services, provide scalability, focus on reporting and analytics,
and come up with creative pricing plans if this software starts to be given
away with the Great Plains software or other Microsoft toolsets.”

Get the Free Newsletter!

Subscribe to our newsletter.

Subscribe to Daily Tech Insider for top news, trends & analysis

News Around the Web