Microsoft pursues hosted CRM agenda

If both hosted and packaged CRM software are destined to live side by side, Microsoft is determined to bolster its current weakness in delivering the software as a service.

Hot on the heels of the packaged version of MS CRM that went to manufacturing last month, Microsoft has detailed plans to offer a version of the software specifically for ASPs.

Hoping to enlist allies in its battle for the low-end CRM market, Microsoft said it is working with partners such as Bedford, N.H.-based ManagedOps to offer a separate version of the software as a hosted service “soon,” said Holly Holt, group product manager at Microsoft CRM inRedmond, Wash.

“We will provide the ability to be on premise or add the hosted solution through some of our partners,” Holt said. “That is going to be a nice alternative.”

Holt said she believes customers will increasingly turn away from large-scale CRM products in favor of “bare bones CRM,” providing flatter offerings to easily integrate CRM into multiple work processes.

Microsoft CRM runs on Microsoft SQL Server, Microsoft IIS, Microsoft Exchange, and Microsoft NT, enabling an obvious integration benefit, analysts note.

However, hosted CRM vendors, such as Salesforce.com, UpShot, and NetLedger say they are unfazed by Microsoft’s aggressive push into their fierce battlefield.

A lack of personalization tools in its product and the complexity of fitting its software into a multitenant environment will hinder Microsoft’s progress in the hosted CRM space, said analyst Sheryl Kingstone of Boston-based The Yankee Group.

She said Microsoft must provide an online client, as well as boost integration and customization, to sidestep hosted growing pains endured by UpShot, Salesforce.com, and Salesnet.

“The disconnect to client is a pretty big stumbling block for a lot of companies that want to go to a Web-only environment if they have a large remote sales force or workforce,” said Kingstone. “[Microsoft] has a lot of work to do to get it done.”

Eyeing Microsoft’s movement into its backyard, Upshot will announce a multiprocess management solution this week at DEMO 2003. The product will allow UpShot to easily adapt for any meanscustomers run their sales operations and also roll up information for sales executives to see across all divisions, said Keith Raffel, chairman of Mountain View, Calif.-based UpShot.

Despite featuring Microsoft software on UpShot’s back-end, Raffel said Microsoft’s marketing of MS CRM is too tightly aligned with selling other components of its architecture, such as requiring Exchange Server to achieve Microsoft Outlook integration.

Marc Benioff, chairman and CEO of San Francisco-based Salesforce.com, agreed. He said MS CRM presupposes its customers to possess a “tremendous” commitment to Microsoft products.

“You have to be completely committed to Microsoft on your servers to run this technology, and that is Microsoft’s strategy: Pull [CRM] through SQL server, BizTalk, Passport, and IIS,” Benioff said.

According to Benioff, customers are growing more concerned with the threat of war and a weak economy. That will curb spending toward additional investments or technology burdens, he said.

“Microsoft has built a product for the ’90s, not for the new century. Microsoft is in denial. People don’t want more shelfware, they want success,” Benioff said.