CRM moves into mainstream*

By Michael Burns Microsoft's new customer relationship management software is targeted at medium-sized businesses *This is an expanded version of a column that appeared in the June/July 2003 issue. Microsoft has jumped into the multibillion-dollar customer relationship management market with its launch of Microsoft CRM in January. Unless you have been on an extended holiday in a remote region of the world, you have heard about Microsoft CRM. But will the new product live up to the hype? The pitch It has been said that 90% of medium-sized businesses have yet to implement CRM. That's because it has been targeted mostly at large companies. But Microsoft CRM was designed for small and medium-sized organizations, especially those with 25-500 employees. Microsoft hopes to woo its 250,000-plus Microsoft Business Solutions customers (Great Plains, etc.), as well as 92 million Outlook users and 200 million Office users. The product CRM allows marketing, sales and service personnel to work as a team and share information in what is sometimes called a 360° view of a customer. For example, CRM would prevent a salesperson from calling a customer without knowing about a serious service problem. CRM is also known as the front-office system, whereas the accounting or enterprise resource management (ERP) system is often called the back-office system. It's important that both systems be integrated. You have probably heard of contact management systems such as ACT, Maximizer and Goldmine. Contact management is one component of CRM, but tools for automating marketing, sales and service are also included. Marketing automation could encompass campaign management, telemarketing and computer telephone integration (when the telephone rings, for example, the contact automatically appears on your computer). With sales force automation, sales opportunities are tracked with workflow rules that automate stages in the selling process. Service management will help service representatives track and resolve customer service cases. The price For a company that has 25 people using the system, expect to pay about $50,000 for software and implementation, plus hardware upgrades if required. This might sound steep, but it is a lot less than what you would pay for higher-end systems, which can run up to $6,000 per user for a software licence and much more for implementation services. Assets Extensive functionality. Out of the starting gate, Microsoft CRM has functionality that should meet the needs of small and medium-sized businesses for sales and customer service. The first release contains opportunity management, sales process management, quotes, order management, case management, knowledge management, service contracts, etc. A browser is enough.  Microsoft CRM is one of a new breed of systems that can operate with only a browser on the workstation. Browser-based applications have many advantages, including optimal remote access; simpler administration (you don't need to install or maintain anything other than the browser on a workstation); reduced investment on the workstation, since a browser-based system does not need a lot of power; and the user interface is well known. Polished user interface. It seems many vendors have compromised on functionality with browser versions of their software. Microsoft has raised the standard with its clean and full-featured user interface. A .NET first.  Microsoft CRM is the first Microsoft business application to be developed using .NET - Microsoft's strategy to implement web services. Web services allow different systems to communicate with each other by using standards that define data. They have the potential to let different systems communicate with each other easily. Integration problems would exist no more. Electronic Data Interchange (EDI) would be replaced by web services. Business-to-business (B2B) eCommerce would become a reality. New applications could be assembled using programs available on web services. Accessible price. Microsoft has made CRM more affordable to medium-sized businesses. Integration with Outlook, Word and Excel. Salespeople can access full sales functionality from Outlook or a browser. Users can use Microsoft Word Mail Merge or export data to Excel. Integration with Great Plains and other Microsoft Business Solutions applications. There are many points of integration, including contacts, products, orders and invoices. Workflow is everywhere. Workflow allows you to establish rules and actions based on a change in data. You could fire e-mail, change the status of an opportunity or run a process. For example, the system could escalate a service request if the problem had not been fixed on time, and send an e-mail to the manager. Sophisticated security. Sharing information is critical to CRM, but there is sensitive information that should not be shared. Microsoft CRM comes with a security engine that will restrict access based on rules, and will allow exceptions as needed. For example, there might be a rule that all salespeople in the western region are prevented from seeing opportunities in the East. However, there may be an account that crosses regions, which can also be shared with all salespeople using Microsoft CRM. Good customization. The system has many layers of customization starting with views of the data You can select which columns appear in a view or sort by column. Rather than panning across the screen, you can preview all the data by pressing a key for a particular record. The system provides tools for adding fields. You don't change the underlying database, but rather what is called Metadata, and your changes should not need to be redone as Microsoft releases new versions. Vertical ISV (Independent Software Vendor). Many developers are signing up with Microsoft to offer a vertical solution (targeted to a specific industry) such as financial services, pharmaceutical or professional service-based organizations. Crystal reports. Microsoft ships with Crystal Reports, which is a very popular report writer used in many of the leading accounting and ERP systems. Microsoft CRM provides 125 canned reports. Ability to work offline. You don't need to be connected to the central system using Outlook. When you're back online, the system will synchronize. Liabilities High horsepower. To run Microsoft CRM, you will need a heavy-duty server including at least a Pentium 4 with 1.0GHz minimum processor speed, 1GB of RAM memory and a RAID disk array with 20GB of available storage. This should be able to support a stand-alone Small Business Server implementation, which includes Windows 2000 Server, SQL 2000, Exchange 2000 and Internet Information Server. This configuration should support up to 20 users. However, it is recommended that you have three servers with one running Active Directory and Exchange, one running SQL Server, and one running the CRM server. Another server would be recommended for a back-office system such as Microsoft Great Plains. If you're already running Microsoft servers, you just need to connect with them. Web services standards undefined. It will take a number of years before there is agreement on web services standards. However, all the major technology companies, including Microsoft, IBM, Oracle and Sun Microsystems, are committed to sorting out the standards. BizTalk required. BizTalk adds another layer to the cost of integrating back-office systems. However, BizTalk is included in the professional edition of Microsoft CRM, and this will allow you to connect with one other application. BizTalk allows systems integrators to define data mapping, data translation and workflow rules that control the timing and flow of information between systems. Since not all systems are capable of sharing data using web services like XML, BizTalk provides a wider opportunity for building integration with back-office systems. BizTalk is the engine that takes the XML output from Microsoft CRM and converts it into the format that is expected by other applications. Similarly, BizTalk accepts data from existing applications and/or databases in whatever formats they support and creates XML data for use by Microsoft CRM.  It does this through application adapters that are unique to the product.  So, for example, application adapters have been BizTalk-certified for competitive products such as Epicor, Sage, ACCPAC and others. BizTalk adds another layer to the integration process. In theory, BizTalk could be replaced by an external web service that performed the same function. However, web services are not expected to be free, and BizTalk may still be the integration method for a web services future. Current Microsoft technology a must. You will need to keep current with Microsoft technology including Windows 2000, Exchange 2000, and SQL 2000. Microsoft CRM will not work with non Microsoft email protocols such as POP or STMP – you will also need Microsoft Exchange. Performance of Microsoft CRM still an unknown. Benchmarks on performance were not provided by Microsoft at the time this article was written. But even if there are performance problems, this will likely be rectified by upgrading hardware. Since Microsoft CRM uses Microsoft SQL Server as the database, the size of the database is not expected to be an issue for small and medium-sized organizations. Marketing automation still to come. Marketing automation should be available in the second release, which is scheduled for the third quarter of 2003. Online Analytical Processing (OLAP) not included.  OLAP provides a way to slice and dice across multiple dimensions and is a useful method for analysing CRM data. It is possible to generate OLAP data from Microsoft SQL server, but the system does not include a way to generate or use OLAP data from within Microsoft CRM. Not multiplatform. This should not be a concern for most medium-sized businesses that are already using Microsoft technology. However, in larger organizations using non-Microsoft operating systems such as Unix or non-Microsoft databases such as Oracle or IBM's DB2, Microsoft CRM cannot deploy on top of these systems, but can integrate with them. Complexity and shortage of implementation expertise. Microsoft CRM is not like other Microsoft Office products that can be sold at a retail store, installed and used. The average user will require a lot of assistance with Microsoft CRM. For example, setting up the workflow rules will not be easy. You will need guidance from qualified resources, who not only know about best practices related to CRM, but also have expertise with Microsoft CRM. At this time, it will be hard to find a company with experience in implementing Microsoft CRM. Only Great Plains integrated now. Microsoft's other business solutions – Navision, Axapta, Solomon and Small Business Manager – are not yet integrated with Microsoft CRM. It is expected that these systems will be integrated before the end of 2003. Bottom line It's still early days for Microsoft CRM, and you will have a hard time finding anyone to tell you how well it works in the real world. Still, it's been that Bill Gates has bet the company on .NET, and Microsoft CRM is the first .NET business application released by the company. The stakes are too high for Microsoft CRM to fail. Screen shot 1 Screen shot 2 Michael Burns, MBA, CA, is president of 180 Systems (http://www.180systems.com), an independent consulting company. E-mail: mburns@180systems.com; Phone 416-963-1296