Microsoft Assessing New CRM/SBS Bundle

MBS is considering a hard bundle of the upcoming Microsoft CRM (MS CRM) 2005 with its popular Small Business Server, sources said. SBS 2003 packages Windows, Exchange Server, Windows SharePoint Services and other infrastructure goodies for up to 75 users at a discount. The Premium Edition adds SQL Server, Front Page and ISA Server.

Solution providers said a combined SBS/CRM package would give them both the back-end infrastructure and front-office applications many smaller customers need.

Dave Batt, senior director of Microsoft CRM, said the Redmond, Wash.-based company is assessing the possibility of such a bundle. He said Microsoft had looked into any legal impediments and worked them out, but he declined to comment further.

An SBS spokeswoman said that while Microsoft always responds to customer feedback, no such bundle is currently planned.

But it is clear that the CRM side of the house hopes to build on the SBS installed base however it can. It is already recruiting SBS solution providers as well as net new VARs to push Microsoft CRM into even the smallest shops, many of which are not automated, Batt said. In many cases, CRM is sold into these companies as lead-generation software, he said.

MS CRM 2005, formerly called MS CRM 2.0, is due in the second half of the year.

As an interim move, the company next week will launch a price promotion on the current MS CRM 1.2 to SBS customers. Starting Feb. 5, the price of CRM Sales Standard will be $199 per user vs. the $449 estimated retail price, and CRM Sales Professional will be $499 per user vs. the $849 per user estimated retail price. The server will be $499 per server vs. $1,049 per server. These discounts apply for shops running SBS Premium Edition with up to 15 CRM users. Microsoft launched a slightly different SBS/CRM price promotion a little more than a year ago, but it ended Dec. 31.

Some partners, many of which have heard rumblings about an integrated bundle, would like the company to pull the trigger on it. "If they were to make that decision, it would be huge," said Ryan Toenies, CRM practice manager at Inetium, a Minneapolis-based Microsoft partner. "SBS brings Exchange [and] SQL at a very low cost for the consumer, and then CRM gives them the application."

Bruce Steele, senior vice president of sales at ePartners Solutions, Dallas, said a bundle "could open up market opportunities by mitigating risks. You can have the customer-facing solution and the production back end all together instead of fashioning one-off integration," he said.

On the other hand, some MBS partners, miffed that Microsoft cut their margins on CRM, are not thrilled. Some have already abandoned MS CRM in favor of competitive offerings like SalesLogix or higher-margin Great Plains or Navision ERP.

Terry Petrzelka, CEO of Tectura, a large Microsoft partner based in Belmont, Calif., said the software giant has to "focus on easy turnkey answers for customers without complex systems to get to the numbers they need."

MBS COO Orlando Ayala has said there are huge volume opportunities for the group's products, but it needs to better penetrate small businesses to achieve those numbers. So far, the results aren't there. MBS revenue for the second quarter was $211 million, or flat year-over-year. One other way Microsoft could bulk up volume is by taking more advantage of Business Contact Manager, an easy-to-use PIM often sold with Office 2003, some partners said.

"This is a great single-user lead-in to CRM. It's an Act killer, and they haven't been aggressive with it yet. The reason many people are on [Best Software's] SalesLogix is it's Act's bigger brother," said Ben Holtz, CEO of Green Beacon, a CRM specialist in Watertown, Mass.