After launching in a blaze of hype early last year,
Microsoft's CRM software is on a development path that is slower
than expected, 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 was not ready when it was released," said
one customer, Jeremy Whiteley, who switched from GoldMine to
Microsoft CRM, then switched back.
Whiteley, chief executive of Promarketing Gear, bought 10
Microsoft CRM licences for his company, a supplier 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 (£3,800) he'd spent on
it. But although 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 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, PeopleSoft, Oracle and Siebel Systems. The lower end is
served by application service providers like Salesforce.com and
inexpensive contact management systems like FrontRange Solutions'
Goldmine and Best Software'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 analyst Sheryl Kingstone.
"Microsoft is doing okay - it's still generating interest - but
it has to stay active in the market so that it doesn't look like
it's not prioritising it. A lot of its competition is becoming very
active with the channel, and the channel is getting frustrated with
Microsoft."
Green Beacon Solutions chief executive Ben Holtz is one of those
channel partners getting impatient. He is a big believer in
Microsoft CRM's potential, he just wants to see it realised
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 that version 2 would not be finished this
year.
The update's feature set is still being determined, although
Microsoft said it will include integration with Navision 4, an
important addition for customers of the Navision applications
Microsoft acquired.
Holtz's 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 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 customisation work. For this customer, it's a good fit, but most
companies won't spend that much on customisation."
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 are
not yet seamless.
Microsoft claims 1,800 customers for its CRM software. In a
recent report, Gartner 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 supplier by 2005.
Stacy Cowley writes for IDG News Service