Microsoft seeks mid-market CRM success

Microsoft wants to avoid the project failures that have plagued the customer relationship management market by positioning its offering in the small and medium business segment.

The software firm launched Microsoft Business

Solutions Customer Relationship Management (CRM) in Canada on Thursday afternoon before a crowd of approximately 1,000 people at Toronto’s Royal York Hotel. The product, which is available both in a Standard Sales and Professional Suite Edition, is the first to come from the Business Solutions unit that formed last September following the acquisition of Great Plains Software in 2001, and Navision, which was purchased last year.

CRM has emerged over the past two years as one of the most important — and most challenging — technology strategies among corporate enterprises. It typically involves the use of applications to track each interaction a company has with its client, capturing data that could improve future products and services. Siebel, Oracle and PeopleSoft are the best-known CRM vendors in the high end. Vancouver-based Pivotal Corp. is among the leaders in the developing mid-market.

At press time, Microsoft was scheduled to release the results of a study it sponsored examining CRM best practices. Conducted by Toronto-based Customer Relationship Management Association of Canada, early data indicated project failures in the 60 to 80 per cent range.

In an interview before the launch Garth Dean, general manager of Microsoft Business Solutions, said CRM stumbling blocks have typically included product complexity, getting users to adopt the products and a lack of executive sponsorship. In some cases, he said, the size of the organizations involved had made it difficult to execute effectively.

“”Most of the effort was going in at the enterprise level — very complex systems,”” he said. “”Our sense was that the rest of the market was waiting for somebody to come along and say, ‘Hey, there’s an easier mousetrap.'””

Microsoft began building its CRM product from scratch three years ago, Dean said, focusing on ways that it could extend the Windows experience into a new set of processes.

“”Hopefully there’s a familiarity in a large number of the potential users here to the look and feel of the screen already,”” he said. “”They’re already familiar with how Outlook operates, and we just kind of drive out from that.””

According to Mark Tauschek, IT principal with Toronto-based Customer Connections Consulting Group, said Microsoft’s challenge may lie in providing something that won’t require a lot of process restructuring and expense.

“”Unfortunately CRM, more often than not because businesses are so different, it’s very difficult to can a product that really suits the needs of a mass market,”” he said. “”You kind of see it when you start dealing with the Siebels and the PeopleSofts.””

Microsoft’s CRM product will require Windows 2000 Server, SQL Server 2000, Active Directory and Internet Explorer 5.5, though the company also recommends Exchange Server 2000 and Office 2000 or XP to take full advantage of it. This is in addition to the retail pricing for the CRM product itself, which can cost anywhere from $595 per user to $1,945 per user.

“”There is some core platform technology required to run it,”” Dean admitted. “”Depending on the level or age of some of the (customer’s) existing technology there may or may not be an initial investment there. It’s a starting point investment, but it’s kind of a one-time investment. It doesn’t add on forever.””

Microsoft CRM has already been in use for a year at UCS Forest Group, a Toronto-based distributor of specialty forest products like hardwood lumber. It replaced an in-house program the company developed in 1989 called OEI after UCS began an enterprise resource planning project that demanded a CRM component.

Warren Spitz, UCS’s CEO, said the company is using the application to analyze when customers are buying to ensure it has inventory on hand when they need it. In the long-term, Spitz wants to use CRM as the springboard for business-to-business Internet exchanges with clients. He used the company’s expertise in architectural millwork as an example.

“”If they’re doing five floors of a law office in Manhattan, they’ll send us the specifications six months in advance electronically, and we will start accumulating product and work out the specs for them to maximize their yields and so on,”” he said. “”The technology is critical to manage all of that.””

Spitz said UCS is trying to avoid some of the “”people issues”” that have derailed CRM projects by putting a non-IT person, director of best practices Mike Dabner, in charge. A 15-year veteran of the company, Spitz said he will be relying on Dabner to evaluate the firm’s return on its investment as its project unfolds.

“”It’s very much a ‘face-time’ industry,”” he said. “”Our sales reps have to call on customers, irrespective of whatever technology they use.””

Microsoft said it will be offering its CRM product as an on-premise tool or one which can be hosted through selected resellers.

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