• March 14, 2008
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

Should Microsoft Quit CRM?

ORLANDO, FLA. -- Industry pundits, having had a chance to digest the executive speeches, briefings, and partner strategies at Microsoft Convergence 2008 here this week, have begun to express their opinions of the software giant's direction. The consensus has been that the Dynamics platform, including CRM, is a strong software and services offering, hindered by an incomplete philosophy. "The messaging that Microsoft is throwing out to the crowd is really a mixed bag," writes Paul Greenberg, chief customer officer of CRM consultancy BPT Partners and author of CRM at the Speed of Light, on his blog
. "It's not wrong -- but it's not what I'd be doing up against SAP and Oracle, Salesforce[.com] and Sage." In the opening keynote at Convergence, Microsoft President and Chief Executive Officer Steve Ballmer said he saw opportunity in filling the "white space" between personal productivity and applications platforms -- something Denis Pombriant, founder and managing principal of Beagle Research Group, a CRM consultancy, calls "a 15-year-old Microsoft strategy." Pombriant's reaction to Microsoft's positioning? "The message that sends is that [Microsoft is] a big ERP company that is building integrations from ERP to CRM, which is backwards for this industry." Greenberg also finds in Microsoft Dynamics a dangerous gap in customer touch: While Dynamics CRM and the rest of the Dynamics family provide tools for serving the customer, Greenberg sees no sense of engagement with that customer beyond solving problems that may arise. Meanwhile, he adds, the other major CRM vendors are "creating whole new unified collaborative frameworks that enable all the improvements in customer-corporate interactions and corporate-to-corporate interactions. Their messages are not those of extension of the traditional operational and singular but integration of the operational and collaborative. Not the management of relationships but the engagement of customers and employees." In a report released by The 451 Group a week before the conference suggested the right strategy for Microsoft is disengagement -- not from the customer, but from CRM entirely. "[In] one area, Microsoft stubbornly clings to business as usual: CRM and ERP software, which it sells under the Dynamics brand. Despite spending more than $2 billion on deals -- plus untold tens of millions on [research and development] over the past half decade -- this product line continues to lag rivals significantly, particularly at the high end of the market," wrote Brenon Daly, a financial analyst with The 451 Group. "Unlike its also-ran online search division, which has turned to a desperation bid for Yahoo to make up lost ground, Microsoft shouldn't look to acquisitions to close the gap on rivals of Dynamics. In fact, quite the opposite. We would argue that Microsoft would be best served by simply acknowledging that it never made much of Dynamics, and selling off its CRM and ERP assets." The strong sentiment of Daly's report wasn't echoed by Convergence attendees -- in fact, some even believe the company has turned a corner. Greenberg, for example, calls Dynamics CRM 4.0 "[Microsoft's] first truly good CRM product," and notes that the company is aware of the shortcomings he sees and is working to address them. Greenberg also stresses, however, that Microsoft's chances for success rest heavily on the savvy of executives such as Ballmer and Brad Wilson -- the general manager of Dynamics CRM. "Microsoft has an extraordinary opportunity to grab some market share and even, with some fortuitous breaks, lead the market," Greenberg writes. "But right now, I'm not feeling the Microsoft Love (they talked about this) that I need to feel others are feeling." Microsoft's message isn't about building new frameworks for its ecosystem, he says, but merely extending an old framework "that is long broken." That outdated, vendor-defined model, according to Greenberg, is "now being replaced by one dominated by the customer."

Related articles: Microsoft's Latest Convergence Theory Microsoft Convergence 2008: CEO and President Steve Ballmer outlines his company's approach to business applications, expands a partnership, and drops some hints about strategy. Microsoft Bids $44.6 Billion for Yahoo! After repeatedly failing to come to terms on a friendly merger in 2006 and 2007, Microsoft's hostile advances for the No. 2 search company won't be spurned as easily this time. What does the proposed deal mean for CRM? Connect: Everything Is Social The word is everywhere now: social networks, social frameworks, social platforms. Feature: CRM Gets Serious With customer loyalty an ever-more-fleeting commodity, businesses must deliver consistent -- and consistently high-quality -- service. In the five stages that define CRM maturity, is your company among the leaders? Not knowing means you're not there yet. CRM Drives Down-Market SAP and Microsoft make big moves to embrace smaller customers. Microsoft Unleashes a Titan The much-anticipated Microsoft Dynamics CRM 4 makes it to market in time for the close of Q4 2007, to the sounds of analyst praise. A New Flavor of Microsoft Dynamics CRM The latest version, called Titan, is released to the company's partner network as Microsoft gears up to begin hosting the solution itself via Dynamics Live. Feature: It's All Coming 2.0gether As 2007 ends, and 2008 looms ahead of us, patterns are beginning to emerge: The future of business may not be in the hands of the executives, but those of the customer instead. And yet, hasn't it always been that way? Feature: The 2007 Influential Leaders The Enhancer: Brad Wilson, General Manager, Microsoft Dynamics CRM. Feature: The 2006 Influential Leaders The Proselytizer: Brad Wilson, General Manager, Microsoft Dynamics CRM. Feature: The 2005 Influential Leaders The Remodeler: Brad Wilson, General Manager, Microsoft CRM.
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