Microsoft CRM Partners Hopes Ride on V.2

Functionality holes and a slow product-upgrade cycle have created headaches and opportunities for Microsoft Corp.s CRM partners. Those partners are looking to the long-awaited Version 2 of Microsofts customer relationship management suite—scheduled to be released to manufacturing in March—to plug the gaps in the product and make it easier to sell to their customers.

Microsoft, which has relied on partners and resellers to fill functionality gaps in its CRM offering since the product debuted in early 2003, will also rely on partners to build integrations with its back-office applications—integration that Microsoft had planned to deliver itself by this quarter. A Microsoft spokesperson said the reason for the shift is that most customers are buying Microsoft CRM as a stand-alone solution and dont require integration with ERP (enterprise resource planning) systems.

Microsofts newly appointed senior director for CRM products, Dave Batt, said he sees the companys increasing reliance on its more-than-1,700 certified Microsoft CRM partners not as a weakness but as a way to extend Microsofts reach into the potentially lucrative higher end of the midmarket.

"Were developing a methodology, an approach, a platform to bring partners in and have a double-bang effect," said Batt. He said that CRM was new territory to Microsoft and that it had to rely on its partners to penetrate it. "Were trying to do a better job of how we talk to partners and how they understand the business proposition," he said. "We took one general message out to everyone—that CRM is never one size fits all."

Although Batt said Microsoft wasnt necessarily looking to outsource development to partners, Green Beacon Solutions LLC has built a product on Microsoft CRM called Relationship Manager, which Green Beacon hopes will become part of the Version 2.0 release. That release is supposed to include support for lead management, solution selling and e-mail campaign management, according to prior communications from Microsoft.

"That would be great for us, but we havent had any official word yet," said Green Beacon CEO Ben Holtz in Watertown, Mass. "But Microsoft is good at getting feedback from its partners."

Holes in the product and delays in upgrades have frustrated partners.

Raffael Zimberoff, president of Z-Firm LLC, which develops add-ons for Microsoft CRM and for other CRM products, including e-mail marketing, transaction management, document management and voice applications, said hes not aware of any customers whove been able to use Microsoft CRM out of the box without heavy customization, although he said this wasnt unusual for such a nascent CRM product.

"The customers who seem happiest are the ones whove customized it the most," said Zimberoff in Seattle.

There have been other issues. Zimberoff said Microsoft CRM uses both Outlook and Web clients, which he described as "mismatched" in the initial releases of the software. Partners could customize the Web client but not Outlook. Although the problem has since been fixed, Zimberoff said Microsoft is still "playing catch-up." He said Microsoft CRM also offers no capability to assign customers into different groups without massive customization work.

Still, despite the products technical shortcomings, Zimberoff is happy to be a Microsoft CRM partner. "When Microsoft puts something out on the market, they pull the channel with them. The other SMB [small and midsize business] vendors need the channel to pull them, he said. "Microsoft makes a big splash, and Im happy to be in the boat. The power of the Microsoft brand is helping to raise CRM installations, and the more people that install CRM, the better for us."

Green Beacons Holtz agreed that Microsoft has brought tremendous awareness of CRM to the midmarket. "The last couple of years, the midmarket has really exploded," he said.

As Microsoft fills the holes in its CRM offering, Zimberoff said he expects there will still be plenty of opportunity for his company, pointing out that Z-Firm builds add-ons for more-established SMB CRM products such as Best Software Inc.s SalesLogix and FrontRange Solutions Inc.s Gold Mine. "This is a sophisticated market," he said. "People are always going to need add-ons." In fact, he said he hopes Version 2 of Microsoft CRM fills enough functionality gaps to attract more customers to the platform. He said he wasnt impressed that Microsoft claims nearly 3,000 customers for its CRM product.

"For Microsoft, thats not a very significant number," Zimberoff said. "Theyve had as many customers in two years as FrontRange does [for] Act 2005 for Workgroups installations in two or three months. The real question for how successful this product [is,] is how many SalesLogix and Act sites will migrate to Microsoft CRM and be happy doing it."

Green Beacon is considering expanding its Microsoft practice to include Axapta SMB ERP software, Holtz said.

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