Back in January, Microsoft co-founder Bill Gates launched Microsoft Business Solutions CRM (customer relationship management). Mr Gates (who professed to be "absolutely delighted" at receiving an honorary knighthood from the Queen even though he cannot use the title "Sir") appeared in person at a partner and customer event in London to promote version 1.2 aimed at SMEs (small to medium-sized businesses) with 10 to 1,000 staff.

Unlike others, iTSHOWCASE News has never been bitter about the subject of CRM - at least not half as bitter as we are at not having received a press invitation to see the man himself in action on stage - invitation? - where? In a recent issue, we acknowledged that even if suffering something of an image problem, the founding principle behind CRM i.e. actively managing and therefore, by implication, improving the relationship a business has with its customers will never go away. After all, companies must constantly strive to keep pace with growing customer service expectations. For example, my publisher believes that British Airways' customer relationship management is not all it should be...however, that's another (long!) story, but if anyone can bring some extra marketing muscle to the CRM arena, Microsoft can and this could be great news for the sector as a whole.

Definitions

Interestingly, in the press coverage following the Microsoft launch, CRM was referred to both as Customer Relationship "Management" and Customer Relationship "Marketing" which I guess just goes to prove firstly, just what room for manoeuvre there is behind these ubiquitous acronyms and secondly, perhaps more interestingly, how comprehensive or otherwise the concept of CRM is perceived to be i.e. "management" tool or merely "marketing" tool?

Whatever the name, the common CRM definition thread is managing customers and potential customers better through applications such as automated call centres, sales lead or contact management and automated marketing campaigns. More sophisticated systems may also offer reporting and analytical functions to help predict your and other customer's buying behaviour and the ultimate is to link where necessary into back office financial data. In essence, it's all about improving business productivity through a single view of the customer.

CRM uptake

Microsoft's own research shows that only 10% of SMEs have any automated approach to CRM beyond using basic software, and critics point to some of the biggest IT disaster stories relating to CRM projects in large firms. So, whilst liking the idea of CRM, SMEs would seem to have steered away from the cost and complexity involved, usually put down to the difficulties inherent in integrating disparate legacy systems and consolidating data, leaving many firms with numerous information silos but no unifying application. 

That said, Doug Miles, Marketing Manager of ERP supplier Infor Business Solutions, believes that the CRM uptake curve has not stalled but continued to rise steadily - it's just that it hasn't happened fast enough for we commentators.  Matthew Phelps, CRM Specialist with McGuffie Brunton agrees and adds that "around 1 in every 2 new ERP customers are taking the CRM approach as they attempt to gain more control over their sales and marketing activities."

Whatever the case, now enter Microsoft Business Solutions (MBS) - committed to CRM and committed to the SME - good! Apparently so good that research analyst Gartner is already predicting that Microsoft will become one of the top five CRM providers within the next two years. But how is it going to make CRM more accessible, affordable and more importantly, relevant to a sector such as manufacturing?

Familiarity

Described by one MBS manager as combining Outlook with sales and marketing collaboration, a big plus for MBS is CRM 1.2 's ability to integrate with key desktop applications, most notably Outlook 2003. This makes it an obvious option for firms already wedded to Microsoft Office who are looking for CRM that will integrate with their existing applications without too much up-front cost.

According to MBS "end users should find CRM interfaces that build on experiences they will have already had from using Outlook and other Microsoft products, allowing them to quickly add real business value." MBS point to  reduced total cost of ownership (TCO) as implementation times are cut and undoubtedly, the software is likely to be easier and more familiar to use than other products such as Siebel.

Hosted service?

Siebel, although by no means viewed by MBS as their strongest competitor in the SME sector, have however already introduced a low-end CRM solution and hosted service via IBM and BT. MBS too are enabling hosted services to make CRM affordable to all customers. Gates who sees a hosted service as a way for companies to "try before they buy" has hinted about forthcoming announcements of large UK partners offering this service.

Third party developers

Described as "a bare bones product" by one analyst, whatever the apparent shortfalls of version 1.2, version 2 is set to have a possible November 2004 release date but meanwhile, third party developers are also set to improve the product over the next two to three years. Built on a .NET platform, the product is ripe for customisation, opening the doors for any reseller who wants to add flavour to the vanilla product by developing applications for specific vertical industries.

One such ISV (Independent Software Vendor) is K3 Business Technology Group plc, who were chosen as one of a select group of eight software developers to partner with Microsoft in this their first CRM launch in the UK. 

Andy Makeham, CEO of K3 comments: "Microsoft has recognised that CRM applications cannot be one size fits all unlike more desktop focused applications. Business applications have to fit the way that individual companies want to run their operations - and that means partnering with industry experts."

The strength of K3's relationship with Microsoft is demonstrated by the fact that Andy Makeham was also invited to speak at the launch and to present K3's SmartVision, now with embedded Microsoft CRM, to the invited audience of business leaders. Echoing Bill Gates, Makeham said: "Putting the customer at the heart of your business is vitally important and is achieved by an integrated supply chain and having the back office (ERP) and front office (CRM) solutions working together."

CRM for manufacturing

K3 have been providing solutions to the manufacturing sector for over 30 years and has in excess of 1600 customers in the UK. Their focus has been on back office systems such as ERP, so they see their development of the MBS CRM tool as moving into the front office space and driving topline sales.

Russell Dorset, K3's Managing Director is still pragmatic in his sales approach. He knows that manufacturers are notoriously difficult to convince about new IT investments. Whilst they will quite happily sign off a half million pound investment for a new widget machine because they can physically see that it produces widgets with more quality and efficiency than the old machine, they will question even a £10K investment in an IT application unless the benefit is crystal clear.

He also knows from experience that introducing acronyms such as CRM tends to act like a red rag to a bull, so he prefers to let K3's manufacturing sector knowledge and experience speak for itself. SmartVision is about solving real business "pain points," such as having the back office (ERP) and front office (CRM) solutions working together to deliver same view/look and feel, all encompassing sales service data rather than just one dimensional sales contact data.

But this capability has been close to the hearts of other ERP/CRM vendors for some time. To prove the point, Infor's Doug Miles refers to CRM as "Customer Response Management" - a wraparound system that logs all customer contact points and resolves issues relating not just to front office sales order processing, but also purchase order processing, which clearly has an impact on the overall quality of customer service delivered. Many, including Doug, would say that having some form of CRM is becoming very much a given, now the challenge leans more towards integrated SRM - supplier relationship management.

Strong position

K3 claim to have long recognised Microsoft's growing influence on the business software market, and thus struck an early CRM relationship with MBS and although that relationship may not remain exclusive, they are already hyped about their head start. Russell Dorset, comments: "Microsoft is going to take this market by storm. Even prior to its launch we are already starting to see significant interest in Microsoft CRM and without a doubt it will become the defacto standard." Dorset adds: "Microsoft's power in  the  market  means  that just  the mention  of  the words Microsoft CRM has  the  ability to  put  buying   decisions on  hold.  We have a number of opportunities where manufacturers were about to invest in other systems, but now want to go for Microsoft CRM."

As for K3 seeing their development of the MBS CRM tool moving them into the front office space and driving topline sales, only time will tell how successful they will be in integrating their front office CRM with a competitor's back office system. It's never as easy as it sounds. Existing ERP/CRM vendors might question the wisdom behind obtaining an arguable 25% extra application functionality for a whole load of complex and potentially costly integration issues that going outside the single system vendor route tends to throw up.

Nevertheless, I'm inclined to agree that the significance of the launch of Microsoft CRM to the software industry at large cannot be underestimated. Microsoft already dominate the desktop productivity market for business software, and the launch of MBS CRM heralds a new era for the company as it seeks to extend its influence over the core business application software market.

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