CRM.NET might affect Great Plains consultants and integrators

Microsoft recently announced that its Great Plains unit was building a new customer relationship management (CRM) product scheduled to be released late this year or early in 2003. Technologically, the product is groundbreaking for Microsoft/Great Plains (MGP): It’s being built from scratch as an enterprise .NET application, using Visual Studio.NET as the development environment and the .NET framework as the execution environment.

It’s also potentially earthshaking from the perspective of independent software vendors (ISVs) who provide CRM solutions and for the MGP partners who support them. Since MGP didn’t have its own CRM implementation, it has always relied on ISVs and its Great Plains consulting channel to provide an integrated solution. Great Plains has never competed with its ISVs in the CRM space. It’s entering the most lucrative area of the CRM market—small and medium-size businesses that lack CRM software—and taking business that it used to partner for. The Great Plains partner now has to choose between competing solutions, and one of them comes “directly from the source.”

I’ll take a look at the CRM solution and its existing competitors and examine the ways this change could affect Great Plains consultants and integrators.

How the product landscape changes
The CRM solutions provided by MGP and its partners to date can most favorably be described as a minor catastrophe. About four years ago, Great Plains signed a deal with Siebel to provide a scaled-down version of its CRM products as part of a Front Office line of Great Plains products.

But the deal was more sizzle than it was steak.

For Great Plains consultants to implement the solution effectively, they had to make a significant investment in training their installation and support staff on the product. After that investment, Great Plains advised the consultants to get field-sales help from Siebel; the consultants then found themselves at a sales disadvantage to the local Siebel representatives, who consistently tried to up-sell from the “crippled” Great Plains Siebel Front Office implementation to a full-blown native Siebel implementation, cutting the Great Plains consultant out of the deal.

The Front Office implementation was hobbled primarily by Siebel, which provided a limited set of functionality as compared to its full-blown package. It also consistently trailed new technology releases (as compared to new Great Plains releases) by six months or more.

For example, if you wanted to implement Great Plains on Windows 2000 and SQL Server 2000, you had to implement separate NT 4 and SQL 7.0 box(es) to roll out Front Office. Implementing Great Plains Siebel Front Office requires high-end marketing, sales, installation, and technical support resources that are dramatically different from the ones required to support the rest of the Great Plains product line.

The functionality, complexity, and sales cycle of FrontOffice was clearly driven toward large sites at the expense of the lower and middle market.

MGP/CRM/.NET aims for SMEs
Although not as complete as a full-blown Siebel implementation, the new MGP/CRM/.NET package will provide robust Sales Management, Service Management, Activity Management, and Sales Reporting. In combination with other Microsoft products (specifically Microsoft Outlook), it provides more functionality with higher integration than products like ACT! or GoldMine, but less functionality (but still higher integration) than the high-end offerings like SalesLogix, Onyx, and Siebel.

It’s also poised to compete favorably with hosted offerings like those from Salesforce.com, both as a locally-installed application and as one hosted by key Microsoft hosting partners like ManagedOps.com. Its niche will be the small to medium-size companies that use Microsoft, as well as divisions of larger companies who are disenfranchised with their lack of success in getting global CRM packages installed and operating and want departmental or divisional financial and CRM integration solutions.

Whereas MGP has been losing in the small and medium-size business (SMB) space to GoldMine and Interact (ACT!) and giving up the midmarket space to other rivals, including Onyx and Interact (SalesLogix), it’ll now be able to compete effectively with CRM.NET.

How should existing Great Plains consultants respond?
The way Great Plains consultants and integrators respond depends on the type of practice they’re running now. Three basic types of Great Plains CRM consulting practices exist: those that do Siebel, those that provide a Siebel alternative, and those that provide Great Plains CRM solutions only.

Great Plains/Siebel consultants
Consulting firms who’ve already made the investment in training, installation, and support for a Siebel solution need to decide whether the revenue from Siebel installations will be greater than the revenue from MGP CRM.NET installation, customization, and support. They can certainly choose to be in the big company business with Siebel or the small to medium-size company business with CRM.NET, but most (except for the largest practices) have already discovered that going after both markets spreads their expertise too thin.

If you’ve been successful selling the Siebel/Great Plains FrontOffice solution, then you’re already in the Siebel CRM business. Either leverage that advantage to move closer to Siebel or use the customer references to help push down into the midmarket space.

Adopting a competitor’s product (Onyx or SalesLogix) for the midmarket space at this juncture would be foolhardy (and Great Plains/Siebel consultants by this point have already discovered that they can’t sell Siebel into this space effectively).

Great Plains/CRM consultants
Many consulting firms recognized the difficulty and expense necessary to install and support the Great Plains/Siebel solution and chose instead to adopt one of the competitive solutions (e.g., Onyx, ACT!, SalesLogix, or GoldMine). To them, the release of CRM.NET takes away one of their best strategic advantages and revenue sources: the integration that they either installed from the CRM vendor and/or enhanced with their own development resources. That will now be replaced by a package developed from the ground up as an integrated offering.

Perhaps even more discouraging for these consultants is that many customers will delay a CRM purchasing decision in order to see what the CRM.NET package does and how much it costs. (Of course, MGP had no intention of freezing the market by announcing a product that won’t be delivered for nine months. It was just innocently providing companies with the information they needed to plan effectively.)

These consultancies are in the most difficult position because they can’t just ignore the CRM.NET product and hope their customers don’t find out about it once it’s released. Introducing the new product into the sales cycle is likely to delay a purchase decision until late this year or early 2003, when the new product is scheduled to be released. The best course of action for these consultancies is to pursue leads given to them by their CRM channel partner and to focus their sales efforts on the high end of the market. Since MGP/CRM/.NET is aimed at SMBs, these consultants will be able to assure their customers that the partners’ CRM makes more sense to install than the Great Plains offering.

There’s also the simple reality that many companies can’t afford to wait for MGP to release a product in the hopes that the feature set has what they need when there are already products in releases past 1.0 on the market that have a successful installation and support track record.

Great Plains only
The real winners in this announcement are the Great Plains partners who’ve been focused on delivering pure Great Plains installations with utility add-ons but no major third-party modules. They’ve been given both a new product to sell and a new sales channel in which to sell it.

Since CRM.NET works both standalone and as an integrated Great Plains module, it will allow these Great Plains consultants to use it as a way to get in the door of an organization’s sales or support departments and have an up-sell opportunity in the accounting department.

The training and support commitment will certainly be less than the one they would have made to Siebel since learning the Siebel system is like learning an entirely new applications platform—all the customization is also done with Siebel tools and technologies. Consultants can leverage their existing knowledge of .NET and other Microsoft technologies when customizing or extending products like CRM.NET.

Moreover, since CRM.NET is based on the .NET platform and the next release of the general Great Plains product line will also be based on the .NET platform, all Great Plains consultants will have new development and integration opportunities that simply weren’t available when their only choice was to learn Great Plains’ proprietary Dexterity language.

This opens up all kinds of possible integration and add-on development opportunities for companies who want to seriously integrate GP and CRM.NET into their other operational systems. This can now be done at a level unavailable to CRM-only companies like Siebel and Onyx.

The wild card
Of course, the biggest threat to existing Great Plains consulting practices is the inevitable homogenization of the channel. Microsoft/Great Plains is already in the process of heavily recruiting its Solution Provider channel to add Great Plains to its product portfolio. Existing solution providers already have most of the skill sets necessary to install a highly integrated Great Plains solution—Windows 2000 architecture, SQL Server 2000 deployment skills, Commerce Server 2000 development skills, and BizTalk 2002 implementation skills. All they’re missing is the requisite in-depth Great Plains accounting knowledge and experience.

For many Great Plains partners, this could be the right time to merge or be acquired by an existing Microsoft Solution Provider. Once the CRM package hits the market, many of the large Solution Providers will use the installation and customization of the CRM package as a way to leverage their way into existing or new Great Plains accounts at the expense of the existing Great Plains partners.