Alba Spectrum Technologies
Slow Microsoft CRM pace frustrates partners, users
Version 2 not expected until mid-2005
By Stacy Cowley, IDG News Service June 23, 2004
After launching in a blaze of hype early last year, Microsoft Corp.'s CRM
(customer relationship management) software is on a slower-than-expected
development path, frustrating some partners and customers.
Microsoft now expects to have version 2 of the software ready in mid-2005, more
than two years after it released the first version. In the interim, the company
has issued point upgrades to fix bugs and expand functionality, but the current
release, Microsoft CRM 1.2, still lacks features found in rival midmarket
products.
"I think Microsoft CRM wasn't ready when it was released," said one customer,
Jeremy Whiteley, who switched from GoldMine to Microsoft CRM, then switched
back.
Whiteley, chief executive officer of Promarketing Gear Inc., bought 10 Microsoft
CRM licenses for his company, a Kirkland, Washington, vendor of branded
promotional products. But he quickly ran into what he saw as a deal-breaking
glitch in the software: Its insertion of a long string of characters in the
subject line of every e-mail sent through the system. Intended as a feature to
help with tracking, the ID string annoyed many customers, and Microsoft issued a
patch to let users turn it off.
That patch came only after Whiteley had decided to stop using the software.
Microsoft refunded the $7,000 he'd spent on it. Though he found the initial
version riddled with problems, he's still interested in returning when the
software matures.
"I understand they're releasing a new, complicated product. I think there's
potential if they do it right," he said. "We'll evaluate 2.0 when it comes out."
Getting 2.0 out the door will be a major milestone for Microsoft. Microsoft CRM
was the first internally created product from Microsoft Business Solutions, the
built-through-acquisitions group intended to gain Microsoft entry to the
back-end business applications market. Microsoft already dominates in the
operating system and desktop applications market; adding software to run sales,
marketing, accounting and human resources systems opens up a new frontier for
the company.
For CRM functionality, the high end of the market is dominated by SAP AG,
PeopleSoft Inc., Oracle Corp. and Siebel Systems Inc. The lower end is served by
ASPs (application service providers) like Salesforce.com Inc. and inexpensive
contact management systems like FrontRange Solutions Inc.'s GoldMine and Best
Software Inc.'s SalesLogix. In the middle, for companies looking to spend
perhaps $100,000 on a CRM system for a few dozen employees, is an open market,
according to analysts and consultants.
"There are two areas that are really lacking something. One is the really small
market, and the other is a viable, low-cost alternative, something that's not
hosted, in the midmarket," said Yankee Group Inc. analyst Sheryl Kingstone.
"Microsoft is doing okay -- they're still generating interest -- but they have
to stay active in the market so that they don't look like they're not
prioritizing it. A lot of their competition is becoming very active with the
channel, and the channel is getting frustrated with Microsoft."
Green Beacon Solutions LLC Chief Executive Officer Ben Holtz is one of those
channel partners getting impatient. He's a big believer in Microsoft CRM's
potential. He just wants to see it realized faster.
"If it was going to be two years to 2.0, they should have delayed releasing
1.0," he said.
Microsoft doesn't like to commit to release dates, and it only recently
acknowledged version 2 wouldn't be finished this year. The update's feature set
is still being determined, though Microsoft said it will include integration
with Navision 4, an important addition for customers of the Navision
applications Microsoft acquired.
Holtz's Watertown, Massachusetts, services firm has done several Microsoft CRM
deals, and those customers are generally happy, he said. However, Holtz said
he's not selling the software as quickly as he'd expected because of its
functionality gaps.
"We're not actively marketing it because the effort it takes to overcome the
customers' objections is just too difficult," he said. "We just closed a
$50,000, 50-seat deal that will require $150,000 in customization work. For this
customer, it's a good fit, but most companies won't spend that much on
customization."
Because Microsoft CRM is a wholly new product, the company is still working to
fill in functionality already there in rival software. Customers say the
reporting and marketing features are comparatively weak, and while integration
with other Microsoft products is a selling point of the software, those
connections aren't yet seamless.
Designer Doors Inc. information systems manager Michael Kruger said his company
is scaling back its Microsoft CRM use until version 2 is available. The River
Falls, Wisconsin, custom door maker began using the software in October for
around 40 employees, but soon hit major problems with unreliable synchronization
between Microsoft CRM and Outlook.
"We've had issues with other parts of it, but that's the big one. Most of the
others we could live with, but we need to have our remote sales people be able
to use the product," he said.
Consultations with Microsoft -- which has been responsive and helpful, Kruger
said -- led Designer Doors to conclude its problem won't be fixed until next
year's update. As a temporary workaround, Designer Doors is expanding an
internally built pricing tool and using that instead of Microsoft CRM.
"I like Microsoft CRM, and I believe I will like version 2 a lot," Kruger said.
"We feel that in the long run Microsoft will be a dominant player in this
market, and this is a long-term decision for us. We understood (the software) is
a version 1, but we didn't understand there would be this many challenges. Had
we known, we may have waited."
Microsoft claims 1,800 customers for its CRM software. In a recent report,
Gartner Inc. rated the product "promising" but noted that "functionality gaps
and an inexperienced partner network reduce its appeal to midsize businesses
with more-complex, broader CRM needs." Despite those reservations, the research
firm still expects Microsoft to be a top-five CRM vendor by 2005.
One consultancy that deals exclusively with Microsoft CRM, Chicago-based Sonoma
Partners LLC, said business has picked up since Microsoft began promoting the
software to its developer community. Microsoft's December release of Microsoft
CRM 1.2, and the feature extensions due in August, have gone a long way toward
filling in holes, according to Sonoma Partners principal Mike Snyder.
"I think most people realize Microsoft CRM is really strong," Snyder said.
"Everyone wants it done faster, but most people aren't buying it for the quick
hit. It's not perfect right now, but it's clear to customers that there's a road
map and improvements are coming."
The challenge for Microsoft is to make those improvements before buyers lose
patience.
"My guess is that 2.0 will do many of the things we've asked for, but in the
meantime, SalesLogix will have two or three releases," said Green Beacon's
Holtz.
Analyst Kingstone also sees an increasingly competitive environment in the
midmarket.
"Salesforce.com is going upstream, and Siebel and SAP are coming downstream,"
she said. "Microsoft is Microsoft, and they can take their time and still end up
dominating a market. But the economy is turning around and people are making
buying decisions. Some won't wait. Everyone is looking to Microsoft to fix the
problem here (in the midmarket), but they have to decide if they want to be in
the market or not."