Host with the most (Part IV): Microsoft Business Solutions

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In the hosted CRM space, there’s a dog that hasn’t barked yet - and just to complicate matters further it’s the biggest dog of them all. As Microsoft Business Solutions gets set to ship its CRM offering outside of the US from January next year, there seems to be little or no attention being paid to providing a hosted solution. This omission seems all the more peculiar given that MBS’ target market is the SME space, precisely the kind of companies that salesforce.com and NetSuite are mopping up.

So has Microsoft decided to opt out of the current hosting hype? The answer is both yes and no. There is a hosted option for MS CRM in the US, but it’s not particularly extensive nor is it articulated clearly outside of the US. "It’s very simple," says Jeff Young, general manager for emerging solutions at Microsoft. “We have solutions that can be deployed either on premises or as a hosted option.

“We will have hosting partners who will help us in the same way as our premises partners to gain geographic and vertical coverage. It won’t be surprising to see hosting partners comes in different industry sectors as well. We will have an accreditation process for our hosting partners in the same way that we have had certifications for partners in the past.”

To date, the MS applications have only been available in the US. In the year since it was released, the company has worked with one hosting partner, Surebridge. This, according to Young, has yielded some valuable lessons. “To date we’ve only worked with one partners, one which has been a gold certified partner in the past,” he explains. “We’ll be looking for similar hosted partners, not in quite the same way as gold certified partners, but you can think of it in the same way.”

Microsoft facesa similar challenge to the likes of Siebel and Oracle in as much as it needs to balance the revenue model of traditional licensing with that of the hosted approach. This is a burden that pureplay hosting vendors do not have. Young does not see it as a straightforward decision to be made by customers to pick up one approach or the other.

“I don’t see this as a holy war,” he argues. “I think that customers want to have an option. A lot of hosting customers go down that route because they want to do a pilot and see if they can use CRM effectively. Having done that, they then need to ask whether they want to be hosted long term or whether they want to keep the software in house. If a customer is thinking of using software for a period of seven to ten years, then really they’re looking to buy it.

“We very much want it to be a case that we can be highly flexible with them, to fit in to some degree or another with their internal IT strategies. Depending on the number of integrations they need to make to other systems, people are still doing implementations for themselves. A lot of customers have the kind of data on site that means that they want to have full ownership of that data.”

“Less than ten per cent of our customers are using a hosted approach today, but we can let the customer choose because there is the same code footprint. We have a thousand partners for MS CRM, so in every local geography there is someone who can service customers in a hosted manner.”

Siebel’s Tom Siebel recently claimed that Siebel will be the market leader in the hosted sector. Despite having a .Net alliance with Siebel, Young does not see the prospect of a hosting deal between Microsoft and Siebel similar to the deal signed recently between IBM and the CRM giant. He’s also sceptical about Siebel’s boast. “I don’t think Siebel will be the only big player in the hosted space,” he argues. “There are people there today who are doing a perfectly good job.”

“We do see hosting as an important alternative method for delivering CRM, but the fact remains that we have less than ten per cent of our customers in the first twelve months using a hosted model,” he concludes. “We will be adding partners in 2004. We will see Microsoft have a good footprint in the hosted space. We have the advantage of having designed and developed our applications across a three year period when the CRM marketplace was changing and growing. We learned a lot from the first five years or so of the CRM sector. We have the ability to implement very quickly and we have no shelf ware.”

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