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Posted: July 18, 2007 in CRM

Microsoft introduced the latest version of its Dynamics CRM product at the Microsoft World Wide Partner Conference last week in Denver.  The company said that this version of the product is completely multi-tenant and capable of being deployed in any mode — conventional licensing, partner hosted or hosted through Microsoft.  The flexibility of the system is based on the single code set that underpins the system, the company told me.

Any time Microsoft, Oracle or SAP announces something it’s worth paying attention to given the size and clout these industry leading companies have, but in the on-demand space, none of these companies is in a leadership position — the leaders have names like Salesforce.com, RightNow and NetSuite.  So when a company like Microsoft makes an announcement about on-demand computing you have to investigate it partly wondering if this is the announcement that catches it up with the leaders.

It looks like the company has made good progress on the technology, for example, the integration with Outlook looks solid and the functionality appears to be competitive but it looks like the business model might still need a little work. 

If I had to sum up the business model I would have to say Microsoft is trying to position itself in the catbird seat, ready for any eventuality or shift in the market.  The single code base makes the product very scalable and equally adaptable for traditional users implementing behind a firewall as it does for those users who might be traditional customers of the emerging trinity of Salesforce.com, RightNow and NetSuite.  (While we’re at it can we coin a new moniker for them?  SRN?  Doesn’t have quite the panache of Wintel does it?)

In the catbird seat, you don’t really care much which model wins.  If on-demand takes over the world you have a solution, if the traditionalists hold out, no big deal.  If everyone suddenly decides they want to straddle the fence that’s fine because your solution is right there on the rail too.

The part of the business model that makes me just a little hesitant is the way partners are employed.  Microsoft is relying, at least in part, on its partner base to customize and install the products and the company has put significant resources into a certification program for ensuring that the partners are up to speed on the product.  All that is good, the partner channel is a legitimate force and Microsoft has put a lot of time and money into making it first rate.  However, it is still possible for a partner without all the certification to sell and install the on-demand product so the usual caveats to buyers need to apply.

In a related issue, I tried to figure out who has ultimate responsibility for uptime and that can be a bit confusing.  For example, as I understand it, a partner could sell an on-demand system which would run on Microsoft’s servers but other partners might decide to do their own hosting and it’s all perfectly fine.  Again, some diligence is due here because I think the amount of back up and redundancy involved in partner hosting might vary from country to country.

In the demo I saw, Microsoft made a big deal of showing how a partner or user could customize the CRM application for a vertical market.  I had a problem with that.  The customization demo took just a few seconds and it was predicated on accepting and installing all of the features of the vertical application.  When was the last time a customer did that? 

Hidden from view was all the messy work of understanding a business, developing business rules and codifying them in software (and much more).  Even the best tools take a little time to do all that and you can’t get away from the fact that most of the work involved is thinking, for which no commercial computer applications exist (yet).  So, needless to say, there’s still a lot that is not visible in the three second customization process demonstrated in the video.

What’s really going on here is more interesting, I think.  Microsoft has rarely been first to market with a new gizmo — the Surface is a notable exception though I consider it more concept than product.  Over time though, Microsoft has managed to bring out more than its share of innovative products that have made the company lots of money.  While there is still a lot of money to be made there, the innovation play in enterprise computing today is not CRM, it’s the platform.

Salesforce.com and a few others have launched the platform market.  Initially, the platform was an outgrowth of CRM but that was for reasons of convenience as much as anything.  Today the platform and development tools are the tail wagging the dog and Salesforce.com looks like they’re ready to eat a few lunches on the Pacific coast and elsewhere and that’s especially true of Redmond. 

A lot of what Microsoft announced last week sounds really good such as the new release of Microsoft Dynamics CRM, easy customization and programs that further energize the partner base.  Nevertheless, we have heard things like this before, and the delivery dates are too often tantalizingly just over the horizon.  For me it will take more than a few minutes of video in which a generic CRM system is converted to a customized vertical solution before I say this is the real deal.

Maybe I should just move to Missouri.

So, what did you think?

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