|
 |
Features |
Thursday, 14 September 2006
Microsoft CRM Will See the Fastest Growth In 2006-07, Says Gartner
|
| |
Microsoft Dynamics CRM v.3.0 has caused increase in interest, as compared to its predecessor, Microsoft CRM 1.2. Microsoft sold more than 50,000 seats worldwide in 2Q06, but its total market share is still small (1.4 percent of the total CRM license sales...
|
| |
|
| |
Microsoft Customer Relationship Management (CRM) was created in order to assure the proper management of your company's budget and to support the needs and requirements of your business. Since its release in December 2005, Microsoft Dynamics CRM v.3.0 has caused increase in interest, as compared to its predecessor, Microsoft CRM 1.2. Microsoft sold more than 50,000 seats worldwide in 2Q06, but its total market share is still small (1.4 percent of the total CRM license sales). However, Gartner believes that new license sales are likely to be accelerating beyond the 82 percent annual growth rate seen in 2005 to more than 140 percent in 2006.
Gartner has not noticed any specific industry or geography driving a disproportionate interest in the product, nor is the Microsoft Dynamics team focusing its sales and marketing efforts on any single constituent group over another. In other words, Microsoft Dynamics is not executing poorly on a vertical or country-specific sales strategy. The interest in the product would appear to be broad; however, unlike previous versions, 40 percent of seats are now coming from Microsoft Enterprise accounts, while the average number of seats per customer has risen from 23 to 33.
Although there doesn't seem to be a discernible pattern in the types of organisations considering or buying the product, there do seem to be a number of recurring themes in relation to the deployment approach being taken by those with which we've been in contact. They are:
- A desire to replace established CRM systems that have low user adoption
- A focus on pragmatic deployments using a small number of core CRM functional capabilities
- A reticence to undertake significant customisation work to automate complex business processes
- Plans to adopt in smaller countries where there has been no previous local language support for CRM
Gartner believes there's a growing market for 'pragmatic CRM.' This involves deployments, usually in subsidiaries and business units of Global 2000 organisations, along with discrete midsize businesses, in which the goal is to achieve higher user adoption rates for a system that automates one or two straightforward end-to-end sales, marketing and service processes, or a broader set of department-specific processes. Examples include contact management, opportunity management, pipeline and forecasting, some forms of case management and basic e-mail campaign management.
Pragmatic CRM doesn't involve the consolidation of multiple operational CRM systems to achieve a single source for customer data, which is a high-risk deployment strategy that requires more-complex technology, longer lead times and ideal internal political conditions. The rapid increase of interest in Microsoft Dynamics CRM 3.0 results from the product finally meeting the functional/performance bar required to satisfy a changing market mixed with the enormous brand power that Microsoft can bring to bear.
Microsoft Dynamics CRM 3.0 also seems to be garnering interest in deployments of more than 500 seats and, in several cases, more than 1,000 seats. Seven months into the release of the product is still early, because such deals naturally have a longer sales cycles. Gartner believes that more large deployments have been sold during the last quarter than during the previous two years that v.1.x was on the market.
It's still too early to make a definitive statement on the efficacy of the product in such conditions. In particular, we're still waiting for a verifiable, large-scale deployment requiring significant transaction volumes. Implementation partners Avanade and ePartners have been touting test environments that demonstrate Microsoft CRM scaling to 2,000 users on a single server as a proof point; however, completed real-world installations are needed.
Microsoft Dynamics CRM 3.0 is best suited for pragmatic CRM deployments in a wide number of geographies. However, should potential deployments exceed 500 seats, Gartner recommends that, prior to purchasing, users should build in organisation-specific, contractually obligated service-level agreements (SLAs) concerning performance requirements.
Hosted CRM — A Work in Progress
Microsoft is maintaining a commitment to provide Microsoft Dynamics CRM with a range of deployment options, including hosting; however, its market traction has been limited. Our discussions with Microsoft have indicated that fewer than 1 percent of new licenses sold have been deployed in a hosted model.
Microsoft Dynamics relies on the company's partner channel to provide the solution, instead of provisioning it directly. As we noted in previous research (see "Dissecting the Microsoft CRM 3.0 Announcement"), users need to take particular care when considering the hosted option for the product because "... Microsoft is not providing a shared server farm for its partners to use. Each partner will need to establish (or source) its own hosting infrastructure."
These concerns have been mitigated to some extent by the release of Microsoft Dynamics CRM 3.0 Professional for Service Providers. The intent has been to provide hosting extensions, including an OEM pricing structure, that would extend the product's appeal to organisations interested in providing a complete hosted environment (examples include Philippine Long Distance Telephone, TDC Hosting A/S and Telecom Italia SPA) to resale partners, which then sell it to customers with their own value-added components. If partner-hosted CRM is to work for Microsoft Dynamics, then service providers will be critical, because, even with the release of the new product, there has been discussion that setting up and maintaining a stable and optimised hosted version of Microsoft Dynamics CRM 3.0 is complex and requires specialised skills.
Microsoft Dynamics has since developed its hosting strategy with the announcement of Microsoft Dynamics CRM Live. This service will be operated and managed by Microsoft in its Windows Live data centers. It will be based on a future release of Microsoft Dynamics CRM (currently codenamed "Titan"), which will provide a true multitenant architecture. It's likely that CRM Live will improve the uptake of hosted licenses purchased directly by end users, because they're likely to welcome Microsoft's direct involvement in service provisioning.
However, this next stage is not slated for release in the United States until mid-2007, and other countries will probably have to wait until the end of 2007. Although Microsoft is working on Titan and CRM Live, its competition in the hosted CRM space is pulling well ahead. Salesforce.com has developed its offering to include AppExchange (see "Salesforce.com's AppExchange Community Will Take Time to Develop"). This is an innovative platform that enables third parties to extend the core application with solutions ultimately run on Salesforce.com's infrastructure, thereby creating an immediate global distribution system for those undertaking such work.
Salesforce.com will become a significant competitive force for the acquisition of partners. This will be a critical factor in the long-term sustainability of CRM platforms. In addition, Microsoft Dynamics will face increased competition from NetSuite. Not only is NetSuite starting to build out its own platform with NetFlex, but also its CRM offering boasts tight integration across a range of hosted ERP capabilities. Microsoft Dynamics Live strategy has not been extended to its ERP offerings, putting Microsoft at a disadvantage for customers seeking a more-comprehensive, hosted business application solution.
User Advice
Microsoft Dynamics CRM 3.0 is best suited for on-premise deployments. Deploying licenses in a hosted model requires a stringent assessment of the partners involved in delivering the service. This potentially extends to the direct-provisioning partner and the partner implementing the Service Providers edition. Users should also be aware that Microsoft Dynamics' strategy is pragmatic, and is focused on improving the quality of a hosted delivery model for CRM. Microsoft Dynamics CRM is not well-suited to organisations looking at software-as-a-service (SaaS) for a more-comprehensive provision of business application requirements.
By using Microsoft CRM, you will be able to analyse the competitors' performances and to evaluate the trends, using reporting tools. But Microsoft CRM 's main purpose is to support and adjust the needs of the mid-market businesses and to deliver superior customer service. All employees who work directly with customers can get all the information they need by using Microsoft CRM, in order for the cooperation process to be successful and the customers to be surprised of the efficiency of the services they receive.
Source
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
|
|
