How Microsoft plans to make its mark in CRM

Microsoft Dynamics CRM has become a key product for the company, according to CRM division general manager Brad Wilson — and it's an area the software maker plans to invest in further.

According to Wilson, when Microsoft earlier this year committed itself to investing $1bn (£647m) annually in the construction of new datacentres to support the Microsoft Live portfolio of on-demand software, some of that sum — he declined to specify how much — was earmarked for CRM.

Earlier this month, ZDNet UK spoke to Wilson to find out how he intends to make that CRM investment and whether he thinks it will be sufficient to beat on-demand CRM leader Salesforce.com on its own turf. Wilson made it plain that, despite the SME bias that Microsoft CRM may have acquired, it is equally aimed at the enterprise.

Q: Microsoft has been in CRM for some time, but just how long?
A: We've been in the CRM market for five-and-a-half years, and have more than 16,000 CRM customers and more than 750,000 users.

Microsoft is investing more annually on datacentres than the complete revenue of all the on-demand players — $1bn annually. As a company, we are investing heavily.

How is that customer base made up?
More than half of the business is international — outside the US — and, although we started out as an organisation focused mainly on the small and medium-sized businesses, more than half of our revenue now comes from large enterprises.

Salesforce.com is very popular, so how do you compete with it?
We do and we have people who switch from Salesforce.com fairly routinely. But there are a number of companies that compete in this space and everyone wins some and everyone loses some.

What I like about our strategy is that Salesforce.com has a single operating model, which is that you rent it from them forever. Our software comes with a choice of either having an on-demand subscription offering or buying the software. If you talk to analysts today, they will tell you that, of all the CRM in use throughout the world, probably about 90 percent is deployed on the premises.

We want to give our customers the choice. Whether you want to go on-premises or to a cloud-based offering, the choice is yours.

Does this mean you don't find the cloud particularly valid?
It is not so much that — and this is a somewhat controversial view — but I don't really care. I have an agnostic model: if you want to buy the CRM software, great; if you want to go ahead with on-demand, that's also great.

For us, it is a single codebase. It's literally the same software running.

There is no difference between on-premise or on the network. The only difference is how long your network cable is. I think sometimes people get too caught up in it. The world is not really binary.

What new products are coming up?
About 11 months ago, we shipped our CRM 4.0, which is a fully multi-tenanted system that you can deploy from outside the cloud.

What we announced [earlier this month] is a new set of accelerators for CRM 4.0 [on sale 1 December]. These are extensions to the core system so that, when you add them to CRM 4.0, they offer capabilities such as e-service for handling web cases. This lets customers submit cases online and check things such as status very easily.

What do you mean exactly by 'cases'?
Well, if you have a broken fridge and you want to contact the retailer or manufacturer, then you can go to the website and that will submit information that will flow into the CRM system and then trigger a workflow.

So e-service is really that web interface to customer services, as opposed to the call centre. What we provide is the data and the workflow to support e-service scenarios.

Another one is extended sales forecasting, which is a way to lock and manage forecasts that goes deeper than the usual sales-automation facilities.

There are new analytics in business intelligence; sales methodologies. And then there is enterprise search integration through SharePoint.

But are these new?
We talked about them at our partner conference back in July in Houston but...

...we haven't had a customer launch before [this month].

So presumably these are intended to deal with the view that Microsoft has not been in the CRM market very long and that, to understand and execute sophisticated CRM, you need a specialist supplier?
The wildly less popular ones? The ones that have had staggering adoption problems over the past 10 years? I think there is really a philosophical difference [between Microsoft and those suppliers]. We are not going to give you a gigantic list of features. You know how you want to run your business.

So, for us, user adoption is key. If they [the users] are not going to use the system, you are pretty much guaranteed a failed deployment.

We give you enough flexibility so that you can run the system how you want to. So I find we will beat a classic offering from your CRM vendors on end-user adoption and platform flexibility. Those factors will far outweigh the fact that other people have more pre-built stuff.

We went into a sales opportunity against a classic CRM vendor and measured its software. Out of the box, its software had only a seven percent fit [only seven percent of the software could be run without modification].

When you think about it, it is very difficult to sit in Palo Alto or Redwood and design something that is going to fit any business — a system that will work with every business in the world, whether it is in Turkey or South Africa. So the key now is flexibility. How easy is it to add the stuff we need?

I think the old model of 10 years ago, where you built a system that had a big slab of stuff that you had to adopt, has gone.

At the same time, we will still bring out our accelerators with pre-packaged software, and more and more of them. But we release them as open source. The idea is that we just put this stuff out there and let people use it. And, if our partners use it, all the better.

So are these products free?
Yes.

But you are charging people for the software.
You have to buy the core licence but, once you have bought it, we are not going to try and nickel and dime people for bits of process and functionality. We don't believe in that.

We are taking the approach of wanting to make CRM much more affordable. Affordable in terms of TCO [total cost of ownership].

Part of that is in the core. We think we've done a pretty good job there and we keep adding pieces of incremental value through the accelerators. Even in the on-demand space, we want to go in and make it more affordable. CRM in on-demand tends to be relatively overpriced. So we want to make that price come down.

How do you charge? It is on a licence basis?
We have a server price and a user price — what we call a server licence and a client-access licence. The server price is nominal, relatively low and doesn't tend to go up. The primary driver of price is how many people use it.