MS CRM Spurs Mudslinging

With software giant Microsoft Corp. on schedule to deliver its entry into the CRM space by the end of the year, most rivals anticipate an inevitable shakeup and are bracing by updating marketing messages, fortifying sales pitches to potential customers, and solidifying development plans. But a handful of CRM players are also going on the offensive by releasing public statements discrediting Microsoft's forthcoming product. UpShot Corp. and SalesLogix are among those CRM players defending their CRM territory by firing barbs at Microsoft. UpShot, an online CRM provider, on Monday issued a press release titled "Microsoft Dropping Lump of Coal in CRM Industry Stocking." The press release details how, from UpShot's perspective, MS CRM signals more client/server headaches for users. UpShot founder and chairman Keith Raffel told destinationcrm.com the purpose of the press release is twofold. First, Upshot officials believe that a hosted CRM model is the way to go. The Mountain View, CA, company was also among the first to use Microsoft's .Net framework to deliver Web services. Raffel says UpShot is justified in publicly calling Microsoft on the carpet for not delivering an Internet-native CRM product when it is pushing the entire development community to a Web services model. Second, Raffel says that Microsoft has huge marketing muscle--it is his job to make sure that customers know there are alternatives to Microsoft's products. "We want to make sure we are not lost in the brouhaha," Raffel says. SalesLogix and others are also attempting to get in their two cents by offering its executives to speak with the media. Putting company officials in front of the media for reaction to a new product or big industry event is not unusual, but an overtly negative take on a competitor and attacks on a specific product have been less common in the technology industry of late. The database wars of the early and mid-90s between Oracle Corp., Microsoft, Ingres Corp., Sybase Inc., Informix Corp. and IBM Corp. are the most reminiscent of such mudslinging. Dennis Pombriant, vice president and managing director, CRM practice, for Boston-based market research firm Aberdeen Group, says this is reminiscent of the nastiest of political campaigns. "Given Microsoft's market power, most competitors seem to be attacking early and often," he says. Pombriant says that because Microsoft announced MS CRM in February and has only given a few limited glimpses of the product, rivals have spent the past 10 months trying to fight off an unknown and emotions are getting the best of them. "I don't know if Microsoft CRM is the greatest thing since sliced bread, but Microsoft competitors want to make sure customers don't think so," he says. "And if you ask those rivals, they might tell you they invented sliced bread." With the exception of Siebel Systems Inc. the CRM market doesn't have a clear leader, and many players fear Microsoft's history of coming in late to a market and displacing established leaders--think WordPerfect, Lotus 1-2-3, and dBase--will repeat itself in the CRM space. However, Pombriant says the strategy of going negative might backfire. "They might set the idea in people's minds that this is not a wonderful product, thereby lowering everyone's expectations. So, even if the product isn't so great, that will be OK." But even SalesLogix officials admit that Microsoft is bringing a lot of attention of the CRM market, and that the increased visibility benefits the entire space. Zach Nelson, president of NetLedger, which makes the Oracle Small Business Suite, says he is also excited about Microsoft getting into the CRM market. "Because of Great Plains, Microsoft is touting CRM plus accounting with its forthcoming MS CRM application," Nelson says. "ERP and CRM are a good combination, and what we have been saying all along. We think this will be positive for NetLedger." Upshot's Raffel says CRM does not need Microsoft to be validated and those that welcome the software behemoth with open arms need to be careful. "There are many instances where it is naive to welcome competitors into the market," he says. "I remember when Apple welcomed IBM to the PC market. That was naive at the time and even more so in retrospect." The UpShot press release is hardly welcoming and doesn't pull any punches: "Microsoft is supporting a business model and software architecture that has led to customer dissatisfaction rates of over 50 percent. By bringing out its MS CRM using client/server architecture and traditional software licenses, Microsoft is undercutting its own efforts to move the software industry to a Web-services model," the release states. According Raffel, "I just don't understand what Microsoft is up to. Its evangelists sing the praises of a Web-services model, which dramatically lowers lifetime costs, enables speedy deployment, and improves user adoption. Now Microsoft is coming out with a client/server CRM product even while analysts report that this approach costs too much, provides no discernable ROI, and leads to customer rejection." Raffel goes on to state that he fears "MS CRM will give a black eye to the entire CRM industry just when Net-native offerings were emerging as a more viable and successful alternative...." UpShot is hardly the only ASP that is vocal about the competition. Recently PeopleSoft's CEO Craig Conway was quoted in the San Jose Mercury News saying negative things about the lack of profitability from ASPs and Net-native CRM solution providers--particularly Salesforce.com. Salesforce.com fired a few shots of its own last Wednesday when it unveiled a new $5 million to $10 million advertising campaign attacking market leader Siebel. Salesforce.com's chairman and CEO Marc Benioff reportedly has a long-standing feud with Siebel founder and chairman Tom Siebel. Benioff replaced Siebel at Oracle when Siebel left to launch his CRM company. "It's getting ugly and there is no end in sight," Pombriant says.