Watch out Siebel: Big bad Bill’s coming to get you - maybe!

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Last week's editorial on why application software companies should be more ready to chase the small and medium enterprise (SME) market rather than trying to delude themselves that they are the new SAP seems to have stirred up a few of you. Fortunately most of you appear to agree with my view that there are huge opportunities in chasing business in the mid-tier instead of obsessing about picking up the big enterprise wins.

But I wasn't really expecting the immaculate timing of Microsoft's declaration of war on the CRM market to substantiate my case quite so conveniently. That said - and thanks Bill, I owe you one! - my main reaction to the news that the Redmond behemoth is finally making its move was one of relief that the phoney war is finally over. Now we can focus on the hostilities themselves.

It should also put a spring back in the, at times faltering, steps of the Great Plains brigade. Ever since Microsoft bought the company, there's been an air of uncertainty about the direction of the vendor. It's ideally suited to the SME customer, but too many analysts and Microsoft people were ready to declare that in fact Great Plains was Microsoft's Trojan horse into the enterprise applications arena. So much so that many Great Plains people themselves seemed to become uncertain as to exactly where they should be positioning their products, which is a crying shame given that they fulfil a couple of the rare commodities of many apps packages: they work and the customers like them!

No-one of course should doubt the enterprise ambitions of Microsoft. Nothing winds up a Microsoft executive more than referring to the company as a desktop software firm or a PC software vendor. Much work has been done trying to convince the world that NT and Windows 2000 are robust enough to compete with Unix as enterprise class operating systems, with debatably successful results.

And there's evidence that the company is ready to tackle bigger markets. The SQL Server database was declared enterprise class by some analysts with the launch of release 7.0 a couple of years ago. This was supposed to enable the company to take on Oracle and IBM head to head. Well, if it is doing that, it doesn't seem to be doing it terribly well. How you count database marketshare is a hotly contested question, but whatever method you use, Microsoft trails way, way behind the two market leaders in the database stakes. There are some Microsoft stories that are just too tall to believe and the notion that SQL Server is as robust as Oracle or DB2 is one of them.

So it's encouraging to see that Microsoft's claims for the CRM push are more focused and grounded in reality. This is very clearly SME land they're after. Much has been made of the potential conflict with the likes of Siebel and Onyx, but on reflection I just don't see it myself. Well, not now at least. Maybe once Tom Siebel wakes up and realises that his one trick pony has run out of enterprise grass to graze on and needs to move down to smaller customers than there might be some tension, but that's a couple of years off yet.

The Microsoft offering is likely to be highly appealing to the SME customer. It's going to be cheaper than current offerings, intergrate seamlessly and conveniently with other Microsoft apps with huge installed bases, such as Office, and it will be sold by a group that understands the CRM and SME markets in the shape of the Great Plains operation. Good grief, they might even get their channel strategy right if they're not careful.

OK, it won't have all the bells and whistles of Siebel and Onyx et al, but it will probably have enough to meet the needs of most SMEs and in times of recessionary pressure, enough is what people are willing to spend money on. Most applications contain excessive functionality, nice to haves but not need to haves. On this occasion, less could most certainly be more.

So will Microsoft become a CRM champion? It's a definite maybe. The hosting option that the company is touting seems unlikely to appeal as most small businesses tend to hang on to their software internally, so that's probably an area of weakness. But anyone who writes off Microsoft's chances in the CRM space is a fool.

The last person to seriously underestimate Bill Gates determination was Jim Barksdale, late of Netscape, who when the browser wars were at their height and Microsoft was trampling all over his installed base, declared that God was on Netscape's side. On that occasion, God got it wrong. How much the Almighty knows about the CRM market remains to be seen...

Related news:
Microsoft launches itself at CRM market

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05th Mar 2002 11:37


One man's folly is another man's wisdom of course, but I'm confused by the assertion that I'm "high" on myself by my argument that anyone who writes off Microsoft's chances is a fool. Given that the correspondent then goes on to support the notion that Microsoft could become a dominant force, I don't see who the fool is here.

As to the Netscape argument, I have met with Jim Barksdale on several occcasions and while I always found him a charming and erudite individual, he was ruthlessly outgunned by Gates. It may be that there was little Barksdale could have done to prevent what happened - although this is debatable in the light of the infamous AOL prefered browser incident which was naive in the extreme - but the fact remains that he did come across as complacent in the face of what was going on.

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04th Mar 2002 10:47

"The hosting option that the company is touting seems unlikely to appeal as most small businesses tend to hang on to their software
internally, so that's probably an area of weakness. But anyone who writes off Microsoft's chances in the CRM space is a fool"

Yep. Precisely.

Recall that a few weeks ago, Bill Gates announced a major re-direction in MS software strategy towards Internet security.

Bringing a company's CRM apps under his in-house umbrella would fit the strategy, I think.

I'm guessing that companies' (well-founded) fears of cyber-terrorism will outweigh their I.T. groups' desires to hold CRM software in-house.


Paul Baker
Account Director
Research Dimensions

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avatar
04th Mar 2002 10:52

Mr. Lachlan
I enjoy receiving your weekly email. I did have some observations regarding
the SME market.

I am a strategy consultant. My firm works almost exclusively with small and medium sized companies in the Southeast part of the US. To be very candid, for some of the sofware companies must learn to do at least two things
successfully if they are going to be successful in this market.
First, they must clearly and concisely be able to explain what it is they do (if it is a service) or what their product does. I had lunch several weeks ago with a sales rep from a software company that was looking for some
guidance on how to be successful in the SME market. After 60 minutes over lunch, I still do not know what his software does!!! This is a problem.
Many people in the SME market are owners/shareholders of the business. In most cases, they want vendors to get to the point and not confuse them. Too many software companies do this.

Secondly, these companies need to squelch the hyperbole and exaggeration (on this side of the pond it is known in the veracular is BS). While such approaches may work in other markets, it does not work in the SME market.
In fact, it is counterproductive in most cases.

Having made the above observations, I do think the SME market represents a significant opportunity for many companies. Many companies are behind in technology. They know they need to improve but, all too often, they do not know who they can trust to do it.

Lynn Daniel

Thanks (0)
avatar
04th Mar 2002 10:56

Stuart,

The big companies cannot get to the Small Business Market. So many have tried and so many have failed. To them it is a group of minor nuisance niche markets. I worked for several larger companies like Bell Atlantic (Verizon - 24 years in product management SBM)) and Alcatel and they just do not get
it.

I now have my own company that is doing what Alcatel tried to do with their short entry into the PC PBX market in the US a couple of years ago. I was VP of Marketing and Development when they finally gave up.

When I left, we had so much obvious research about the VARs inabiaity to sell, the application providers reliance on VARs to do selling and support, the needs of the niches; that it was almost impossible for me not to go
there! We are about to receive some financial support from Intel/Dialogic (if all goes well during this last round of legal discussions).

During our past several years, we worked with IBM and they tried and failed and no one including Intel or Microsoft has cracked the code either.

When you look at the market, it is a solution sale not a technology sale. However, the application providers have been unsuccessful creating a VAR channel, yet they can sell but then not deliver. But the application is only
part of the solution. Integration; unified messaging ala Outlook, fax integration, telecommunications and e-commerce are all part of the solution as well as some lite call center/help desk. We do that and have started a
small elite regional VAR channel that supports our integration as well as our integrating the better vertical applications and providing them a deliver / maintenance channel.

The product is almost too easy to sell. One simple demo and they simply want to know when it can be installed. There is almost no questions of price. The VARs love the program. The application providers love the support and added features we deliver. And the customers simply love the product and support.

This is not rocket science, it is simply looking for the problem not forcing
technology. So how much of the new Office XP do you use???? How about having Outlook answer your fax's and telephone ang give you the information over the device of your choice when you watt it? Or have a call directed to your phone with a simple screen pop with all the information you know about the caller including where they are in your companies process? How about not sitting on hold at your Drs. office to cancel or reschedule an
appointment??? How about not having to leave messages because the system will make the call and only deliver a human to you or leave your recorded message if it reaches an answering machine. It can even reschedule the call
if you want.

Simple stuff but because we are too close to the trees that is no big deal. A very big deal if you are a small or very small business, and it does not cost too much.

Robert J. Duerr (Bob)
President
Integrated e-com

Thanks (0)
05th Mar 2002 11:37


One man's folly is another man's wisdom of course, but I'm confused by the assertion that I'm "high" on myself by my argument that anyone who writes off Microsoft's chances is a fool. Given that the correspondent then goes on to support the notion that Microsoft could become a dominant force, I don't see who the fool is here.

As to the Netscape argument, I have met with Jim Barksdale on several occcasions and while I always found him a charming and erudite individual, he was ruthlessly outgunned by Gates. It may be that there was little Barksdale could have done to prevent what happened - although this is debatable in the light of the infamous AOL prefered browser incident which was naive in the extreme - but the fact remains that he did come across as complacent in the face of what was going on.

Thanks (0)
avatar
04th Mar 2002 10:47

"The hosting option that the company is touting seems unlikely to appeal as most small businesses tend to hang on to their software
internally, so that's probably an area of weakness. But anyone who writes off Microsoft's chances in the CRM space is a fool"

Yep. Precisely.

Recall that a few weeks ago, Bill Gates announced a major re-direction in MS software strategy towards Internet security.

Bringing a company's CRM apps under his in-house umbrella would fit the strategy, I think.

I'm guessing that companies' (well-founded) fears of cyber-terrorism will outweigh their I.T. groups' desires to hold CRM software in-house.


Paul Baker
Account Director
Research Dimensions

Thanks (0)
avatar
04th Mar 2002 10:50

You're a little high on yourself to make judgements as to who's a fool or not. As for Jim Barksdale, despite Bill Gates' illegal tactics, which were recognized as monopolistic practices in a court of law, Mr. Barksdale managed to refocus his company on server software and the Netcenter portal, and despite it all managed to build a business that AOL felt was worth paying $10B for. If that's failure, then I want to fail in the worst way
possible.

Like so many other so-called pundits, you are simply regurgitating the
free-market bulls___ that Microsoft, once determined, legally beat Netscape in the browser wars. That is not what happened, and perhaps a better focus for your article would be whether or not Gates will be allowed by this
country to once again illegally leverage its OS and office software monopolies into dominating the CRM space.

Chris Zaharias

Thanks (0)
avatar
04th Mar 2002 10:52

Mr. Lachlan
I enjoy receiving your weekly email. I did have some observations regarding
the SME market.

I am a strategy consultant. My firm works almost exclusively with small and medium sized companies in the Southeast part of the US. To be very candid, for some of the sofware companies must learn to do at least two things
successfully if they are going to be successful in this market.
First, they must clearly and concisely be able to explain what it is they do (if it is a service) or what their product does. I had lunch several weeks ago with a sales rep from a software company that was looking for some
guidance on how to be successful in the SME market. After 60 minutes over lunch, I still do not know what his software does!!! This is a problem.
Many people in the SME market are owners/shareholders of the business. In most cases, they want vendors to get to the point and not confuse them. Too many software companies do this.

Secondly, these companies need to squelch the hyperbole and exaggeration (on this side of the pond it is known in the veracular is BS). While such approaches may work in other markets, it does not work in the SME market.
In fact, it is counterproductive in most cases.

Having made the above observations, I do think the SME market represents a significant opportunity for many companies. Many companies are behind in technology. They know they need to improve but, all too often, they do not know who they can trust to do it.

Lynn Daniel

Thanks (0)
avatar
04th Mar 2002 10:56

Stuart,

The big companies cannot get to the Small Business Market. So many have tried and so many have failed. To them it is a group of minor nuisance niche markets. I worked for several larger companies like Bell Atlantic (Verizon - 24 years in product management SBM)) and Alcatel and they just do not get
it.

I now have my own company that is doing what Alcatel tried to do with their short entry into the PC PBX market in the US a couple of years ago. I was VP of Marketing and Development when they finally gave up.

When I left, we had so much obvious research about the VARs inabiaity to sell, the application providers reliance on VARs to do selling and support, the needs of the niches; that it was almost impossible for me not to go
there! We are about to receive some financial support from Intel/Dialogic (if all goes well during this last round of legal discussions).

During our past several years, we worked with IBM and they tried and failed and no one including Intel or Microsoft has cracked the code either.

When you look at the market, it is a solution sale not a technology sale. However, the application providers have been unsuccessful creating a VAR channel, yet they can sell but then not deliver. But the application is only
part of the solution. Integration; unified messaging ala Outlook, fax integration, telecommunications and e-commerce are all part of the solution as well as some lite call center/help desk. We do that and have started a
small elite regional VAR channel that supports our integration as well as our integrating the better vertical applications and providing them a deliver / maintenance channel.

The product is almost too easy to sell. One simple demo and they simply want to know when it can be installed. There is almost no questions of price. The VARs love the program. The application providers love the support and added features we deliver. And the customers simply love the product and support.

This is not rocket science, it is simply looking for the problem not forcing
technology. So how much of the new Office XP do you use???? How about having Outlook answer your fax's and telephone ang give you the information over the device of your choice when you watt it? Or have a call directed to your phone with a simple screen pop with all the information you know about the caller including where they are in your companies process? How about not sitting on hold at your Drs. office to cancel or reschedule an
appointment??? How about not having to leave messages because the system will make the call and only deliver a human to you or leave your recorded message if it reaches an answering machine. It can even reschedule the call
if you want.

Simple stuff but because we are too close to the trees that is no big deal. A very big deal if you are a small or very small business, and it does not cost too much.

Robert J. Duerr (Bob)
President
Integrated e-com

Thanks (0)
avatar
04th Mar 2002 10:59

Microsoft's entry into the CRM SME market will have the positive impact of
significantly increasing awareness of this sector, as it will undoubtedly
enjoy a significant marketing budget to get the process rolling. Great
Plains has a different challenge. The past two years have clearly shown that
"back office" resellers find it extremely difficult to migrate into the
front office environment. Their sales people are used to dealing with
experienced buyers that clearly understand their needs and are good at
articulating them. Usually a budget has been set and there is a clearly
defined need that stimulates the process of change. The CRM market is
predominately "first time users". There is very limited understanding of
what is possible, what the true benefits will be and more often than not, no
budget set, as they don't know what the costs are likely to be. This is a
very different selling process. And as the old saying goes, the company
that owns the channel owns the market. How will Great Plains / Microsoft
develop their channel to market? Obviously they will target their existing
channel. The question is how many of that channel has already tried the
Siebel MME offering, got burnt (or succeeded) and be reluctant to start
again or expand the product range. The logical route is to target the
channel of the existing players, such as Front Range (Goldmine) and Interact
(SalesLogix). These companies already have a track record, experience,
installed base and sale pipeline. The question will be whether the Microsoft
/ Great Plains offering is functionally strong enough, priced correctly
(both end user and reseller margins) and backed by competent channel
pre-sales / post sales support staff. Goldmine and SalesLogix have been
head to head for years and have numerous resellers that offer both products,
as they each have a place in the market. If Microsoft / Great Plains can
really get their act together, the threat is not to Onyx or Siebel, but to
Front Range (Goldmine) and Sage (Interact) as the channel war heats up. The
most interesting aspect of this commercial struggle is that the likely
winner will be the organisation that delivers the best channel model, great
and reliable products, lots of good leads, acceptable margins, and quality
pre and post sales account resources. In other words, the organisation
that demonstrates the ability to practise what it is trying to distribute, a
good CRM solution.

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