Microsoft Preps Small Biz Attack With Possible CRM 2005/SBS Bundle

Toward that end, the company wants to recruit scads more resellers from outside its partner base as well as from the ranks of Microsoft "Classic" partners, said Dave Batt, senior director of CRM for Microsoft Business Solutions.

It is also weighing a "hard" bundle of the new MS-CRM 2005 (formerly known as MS CRM 2.0) with Microsoft's popular Small Business Server, sources said. Batt said the company is assessing the possibility of such a bundle but would not comment further. He did say his group sees such synergy with SBS now that it is already recruiting SBS solution providers for CRM.

SBS packages up Windows Server 2003, Exchange Server 2003, integrated fax, Outlook and remote access services in an easy to install package for up to 75 users. The professional edition adds SQL Server 2000, Front Page and ISA Server. Microsoft pitched a promotional "soft bundle" of CRM 1.2 with SBS last March.

Some MBS partners laud the potential bundle, even though it could soak up integration dollars that might have otherwise gone their way.

"This could open up market opportunities by mitigating risks. You can have the customer-facing solution and the production backend all together [already] instead of fashioning one-off integration," said Bruce Steele, senior vice president of sales for ePartners, a large Dallas-based MBS partner.

Partners who rely more on services than software license revenue are bound to like this, Steele and other solution providers said.

"I'm not a traditional reseller. We don't move boxes so to some extent we just don't care. The margins are so small, who cares if you buy it from CDW, Tech Data. Buy the bundle and we'll bring you the business logic and generate the solution," said Ben Holtz, CEO of Green Beacon, a Watertown, Mass.-based CRM specialist.

Of course, Microsoft's plan to drastically up the count of CRM resellers could lead to more partner vs. partner competition in the field, but that's a risk the company has to take, even some Microsoft Classic partners admit.

On another front, Microsoft is leaving integration between MS-CRM and its Axapta, and Navision ERP lineup to partners, at least for the foreseeable future, Batt said.

Such integration has been an open question. The CRM 1.0 release shipped with some connectors. "Those connectors did not ship with 1.2, and were not promised for it, and then later they did ship," said one New York area partner. "It was confusing. I guess the good news for us is they have options and they want options like Nolan and Scribe."

Scribe Software and Nolan Computers are Microsoft partners that sell software that ties MS-CRM to the other Microsoft business products.

Now, Microsoft is blessing Belmont, Calif.-based Tectura as one of its top-dog integration partners. Tectura's Danish office is doing CRM to Navision and CRM to Axapta integration that Microsoft will tout on its site, said Terry Petrzelka, CEO of Tectura, a long-time MBS partner.

Two years ago, Microsoft started positing its next-gen Project Green as its end-game integration plan for all of its business applications. But that unified code base has slipped into the future.

CRM is an integral part of Microsoft's business solutions push and partners say the company has yet to hit its internal volume targets for MBS sales. It is banking that the new release of CRM, due in the second half of the year, will help remedy that.

Holtz said Microsoft CRM, regardless of its deployment rates, boosted the market. "If you could take a snapshot of where we are today vs. pre-Microsoft CRM, there's a lot more awareness around CRM in the midmarket now. Microsoft has generated that buzz and continues to do so. Microsoft money spent in marketing has promoted CRM across the sector," he said.

Some even maintain that this buzz has benefited other players, notably Salesforce.com, even more than Microsoft itself.

Microsoft faces another channel challenge with CRM that it does not have with the rest of the MBS lineup.

Some MBS partners used to higher margins than those that come with MS-CRM, have spurned the product in favor of more lucrative Microsoft ERP. Right now there are roughly 850 active MS-CRM partners in this country out of a base of about 1,700, Batt said. That is clearly not enough to hit the ambitious sales goals Orlando Ayala and Doug Burgum have for the group. Burgum is senior vice president and Ayala is COO of MBS. Ayala has said he thinks there are 40 million potential customers for MBS wares.

Batt conceded that Microsoft irked MBS partners with its re-direction, but said it is working to help them via outreach and guidance -- but not additional margin. "We need to help these guys get repeatable business. For MBS partners, we can help with skills and show you how to be profitable with the existing margins," he said.

The goal is to line up an army of partners to attack very small companies and reach up into the midmarket.

The beauty of very small companies is that many of them are not automated yet at all or rely on low-end PIMs. The sales cycle in those concerns vs. larger enterprises is "days and weeks vs. months and years," Batt said.

Most of the recent sales growth for MS-CRM came from "net new partners" who've joined the fold recently, he said. Microsoft now claims 3,500 customers for CRM, and one way it's been winning is by having partners sell "lead generation" systems vs. CRM per se, Batt said.

Clearly this target is a big one for CRM 2005, which Microsoft has said will add marketing and field service capabilities, including appointment tracking to the sales and service functions in the current 1.2 release. CRM 2005 is also supposed to be better architected for use as a hosted solution.

Steven Burke contributed to this story.