Microsoft previews next-generation CRM

The software giant takes the wraps off its new customer relationship management system.

Microsoft released details of the long-awaited update to its customer relationship management software on Tuesday, adding a slew of new tools and making the system available via the on-demand applications delivery model.

The unveiling of the new applications set, which will be known as Microsoft CRM 3.0, is being made in conjunction with the software giant's Tech Ed 2005 conference in Europe and its Worldwide Partner Conference 2005 in the United States, both of which are being held later this week.

Though the package has been given the 3.0 product designation, the applications are only the second major release of Microsoft's CRM applications to come to market. Microsoft introduced its first CRM system in January 2003 and has repeatedly delayed the release of its new version since that time.

"The traditional hosted model says, 'You will rent from me forever,' and I think that people want some more flexibility than that."
--Brad Wilson, general manager of CRM, Microsoft

In February, Microsoft shelved plans to release an expanded version of the software, saying it needed until the end of the year to finish updating the program. The CRM package is scheduled to go into production during the fourth quarter and to reach most customers in early 2006, but Microsoft partners will begin testing applications in July.

According to Brad Wilson, general manager of CRM for Microsoft, the company wanted to hold the updated software's release until the company could make significant functional additions to the applications and offer the package as an on-demand service. In addition to building tighter links between the CRM tools and its Office package of desktop software, Microsoft was also intently focused on making the system easier to use and faster to install, he said.

"We want to be the easiest-to-use CRM system on the marketplace. Some businesses need really complex stuff, and they might go to someone with a lot more bells and whistles, but we're focusing on small and midsized customers and departments within enterprise companies. Increased ease of use is what those people are asking us for," said Wilson.

Among the functional upgrades promised in the 3.0 package is the introduction of a set of marketing automation tools, an established element of most CRM systems that had been lacking in Microsoft's first attempt at the applications. The software includes tools for managing client lists, tracking advertising and marketing campaigns, and for sorting customer responses to those initiatives.

Other additions pledged in 3.0 include increased support for the development of specialized applications for niche markets to be used with the CRM system. The package also boasts expanded customization alternatives for use with specific business processes. In addition, the offering promises more powerful scheduling tools linked directly to the calendar section of Microsoft's Outlook e-mail software.

Tapping demand for on-demand
Perhaps the most significant addition to Microsoft's CRM package, at least from a competitive standpoint, may be its move to make the tools available as an on-demand offering. The company had previously allowed some of its resellers to market a hosted version of the software whereby the applications were run off-site and accessed online, but the expanded on-demand strategy will offer customers subscription-style pricing for the applications and a version of the tools built with Web-based delivery in mind.

Wilson said Microsoft added on-demand because the company believes its best chance to grow CRM market share is to give customers as many delivery options as possible. He said that small and medium-size businesses in particular are seeking on-demand applications today, but he added that giving customers alternatives will be the industrywide model in the future. Not even those companies interested in hosted software will want to continue to pay subscription fees to license the applications forever, he said.

"We want to encourage a host of models. If you want to rent it you can, or our partners can host it for you, or they can deliver it on premises, and it's all the exact same code," said Wilson. "We want to be agnostic about delivery, and it's good to give people a choice."

The executive said some companies are looking at the monthly subscription pricing model offered by on-demand CRM providers such as and getting worried that they will be forced to keep paying for those tools forever. He also criticized Salesforce's marketing message, which

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