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Microsoft charges into CRM fray | July 1, 2007
Prices are down and competition up as the software giant hits the enterprise analytics market
by Ian Harvey
In the emerging business science of quantitative analytics, mere number crunching doesn’t determine success or failure. It’s more about getting the right numbers to the right people at the right time. Because of that, the Enterprise Resource Planning sector is growing and, along with it, Microsoft’s interest. Microsoft isn’t usually credited with driving down the price of software, but its growing incursion into the complex world of ERP applications has created a stir.
According to IDC Canada, the enterprise application market in this country grew seven per cent both in 2005 and 2006 to more than $2 billion, a “significant jump” from 2004’s 2.2 per cent rise.
ERP applications and associated hardware were once a luxury used only by the largest enterprises, but recent price drops have made systems available for only a few thousand dollars per seat.
Many credit Microsoft’s move into the enterprise market for this change.
“In the last three years, Microsoft Canada has grown from a minor player in the front- and back-office enterprise technology market to one of the top-10 providers of ERP and CRM solutions to Canadian organizations,” said Joel Martin, IDC Canada’s vice-president of enterprise applications, noting that Microsoft’s offerings—Dynamics Client for Microsoft Office and SharePoint Server—are priced at US$195 and US$395 respectively per user, compared to as much as US$5,000 per seat five years ago. Those prices are expected to roll out in Canada shortly.
“Until now the price was prohibitive,” said Brad Wilson, general manager of Microsoft CRM. “And really, before this, any kind of business intelligence was a big-ticket item.”
Looks the same, feels the same
The look and feel of Microsoft’s ERP offerings is consistent with Windows XP, Windows Vista and the Microsoft Office suite. This creates a comfort zone in which companies can deploy new business applications.
Familiarity was a big selling point for March Networks, the Ottawa-based supplier of digital video systems. March provides security video systems to banks, retailers, industrial companies and even transit systems in 50 countries, including the Toronto Transit Commission.
March is also a player in the software sector, leveraging its video presence with business intelligence applications to tackle loss prevention and risk management. It knows its way around vast databases. Nonetheless, pulling together an enterprise platform for itself was no easy task. “There were a lot of options, some of which had features I really liked,” said corporate controller Scott Bolton. “SAP did have a lot things we wanted, but Microsoft’s CRM package integrated into our existing Office software...and that was the biggest factor.”
Competitive upheaval
IDC’s Martin expects Microsoft’s new aggressive CRM play will dramatically alter the landscape over the next five years.
“This is a classic case of Microsoft leveraging its vast breadth of product offerings,” he said. “Microsoft Dynamics continues to be more and more a disruptive force in the traditional back-and -front-office applications market. Given the renaissance of current spending in ERP, SCM and CRM solutions and on-going demand, it’s well positioned to capture market share from both industry leaders and niche players.”
“Small or mid-sized businesses have the same needs as large corporations,” said Frank Falcone, CRM product manager at Microsoft Canada. “I can see this going to two-or-three-person companies; picture a real estate agent who needs to track clients and homes they’ve sold. Or even a flower shop.”
Interestingly, Microsoft has partnered with the dominant market player, SAP, to create Duet, an application which links SAP business processes and data to the Microsoft Office front end. The joint venture was extended in April and Duet 2.0 is set for release in late 2008.
This and Microsoft’s own CRM applications mean smaller companies could be Microsoft’s sweet spot. Not that SAP is sweating. In Q1 it posted a nine per cent gain over Q1 2006 for software and software-related service revenues, with similarly consistent increases across its business revenues. Worldwide, it added 1,784 accounts last year, including 100 in Canada, and posted a 41 per cent jump in smaller-company clients.
“Small companies are hitting the wall because they have maybe 12 systems, one doing CRM, something else doing inventory, another accounting and they need something to tie it all together,” said Jeff Watts, SAP’s vice-president of North America SME. “These are companies that, because of globalization, have to compete globally and act like a large company, optimizing costs and growing top-line revenue.”
More Canadian dollars coming
Supplier consolidation in the marketplace has streamlined the CRM choices available to companies, said IDC’s Martin, adding that with the dictates of Sarbanes-Oxley or Canada’s Bill 198, the enterprise application sector in Canada will see better than average growth. This will occur especially in the mid-sized business area—companies with less than 500 employees—though he said some suppliers define mid-market to include organizations with revenue between $250 million and $1 billion. “About 1,000 Canadian organizations would fit that definition.”
Currently, Martin said, the battle for top spot is between Oracle and SAP, but Microsoft is a growing factor. Will this be a case of Microsoft reverting to the mid-1980s tactics (partnering then plundering its allies’ markets) of which it was accused?
SAP’s Watts doesn’t think so. First, Duet is selling—shipping more than 300,000 seats to more than 200 customers in the nine months since June of last year. Second, market growth is making room for more players.
“We see Microsoft as a strong partner with lots of strength at the desktop,” Watts said. “But I think Microsoft is taking a different approach to us. We’re adding value because we understand our customers’ industries and know how to make stuff work when it comes to other platforms. Still, there’s a lot of room for multiple vendors and I welcome them.”
For now the big money is with Fortune 500 companies, but that market is quickly being saturated, Martin said, and the more fertile ground is downstream the companies with 100 to 499 employees.
“SAP, for example, is adopting a go-to-market strategy in the utility and energy industries and Microsoft is targeting the retail market through innovative packaging, while it also has an extensive channel servicing Canada’s small and medium-sized businesses,” he said.
So even if the big battle is between Oracle and SAP, people are not taking their eyes off Redmond.
SIDEBARS
Definitions
The enterprise applications market is a complex collection of software which ties together data from a business in real time to give managers a console from which to make their decisions. the main types follow, as defined by Wikipedia.
ERP: Enterprise Resource Planning manages a business’ assets and resources, including essentials such as general ledger, accounts payable and receivable, as well as manufacturing, inventory and human resources.
CRM: Customer Relationship Management is a broad term covering management of a business’ relationships with its customers, including collecting, storing and analyzing customer information.
SCM: Supply chain management is the process of planning, implementing and controlling the operations of the supply chain to satisfy customer requirements as efficiently as possible. it spans all movement and storage of raw materials, work-in-process inventory and finished goods from point of origin to point of consumption.
SOA: Service Orientated Architecture is an emerging concept which loosely couples different services to support the requirements of business processes and users. Network resources are available as independent services accessed easily.
Getting the right numbers
Business is in the numbers, as any bean counter will tell you. But what separates winning businesses from the rest is knowing which numbers to count.
It sounds simple enough but it’s no easy matter when your metrics are drawn from a plethora of databases housed on a collection of platforms, none of which are compatible. Just finding the numbers becomes a challenge, let alone sorting the relevant from the trivial.
What you don’t see could hurt your enterprise. If your sales department tells the warehouse to ship to a customer but doesn’t know the credit department put that account on hold, profits go out the door with the order. Or, if sales is closing deals faster than the supply chain can fill them, the result will likely be customer dissatisfaction.
It all sounds obvious, but as Thomas H. Davenport and Jeanne G. Harris point out in their book, Competing on Analytics: The New Science of Winning, only a handful of companies are really leveraging data effectively.
Analysis today tends to rely on spreadsheets, prone to input errors, siloed and lagging real-time developments, said Harris, director of research at Accenture. The convergence of the Internet, faster processing, RFID, massive data storage and the rise of software applications to manage and mine data is changing everything because the new crop of emerging ceos are MBA-educated and much more comfortable with technology.
“[Only] around four per cent of companies are really competing on analytics,” Harris said, and up to 10 per cent are working toward it. Wal-Mart, Netflix and Google are classic examples of analytically competitive companies.
Conventional wisdom held mid-sized companies could still manage with a handful of spreadsheets and the right sets of eyeballs analyzing the data—usually the bean counter or the founding visionary who was more likely to operate on gut instinct than the numbers themselves.
“But things are changing too fast,” said Jeff Watts, SAP’s vice-president of North America SME. “Most of our customers tell us they’re in a business they didn’t set out to be in five years ago and five years from now will be in a business they’re not expecting to be in now.”
ETrends Archive
by Ian Harvey
 |
According to IDC Canada, the enterprise application market in this country grew seven per cent both in 2005 and 2006 to more than $2 billion, a “significant jump” from 2004’s 2.2 per cent rise.
ERP applications and associated hardware were once a luxury used only by the largest enterprises, but recent price drops have made systems available for only a few thousand dollars per seat.
Many credit Microsoft’s move into the enterprise market for this change.
“In the last three years, Microsoft Canada has grown from a minor player in the front- and back-office enterprise technology market to one of the top-10 providers of ERP and CRM solutions to Canadian organizations,” said Joel Martin, IDC Canada’s vice-president of enterprise applications, noting that Microsoft’s offerings—Dynamics Client for Microsoft Office and SharePoint Server—are priced at US$195 and US$395 respectively per user, compared to as much as US$5,000 per seat five years ago. Those prices are expected to roll out in Canada shortly.
“Until now the price was prohibitive,” said Brad Wilson, general manager of Microsoft CRM. “And really, before this, any kind of business intelligence was a big-ticket item.”
Looks the same, feels the same
The look and feel of Microsoft’s ERP offerings is consistent with Windows XP, Windows Vista and the Microsoft Office suite. This creates a comfort zone in which companies can deploy new business applications.
Familiarity was a big selling point for March Networks, the Ottawa-based supplier of digital video systems. March provides security video systems to banks, retailers, industrial companies and even transit systems in 50 countries, including the Toronto Transit Commission.
March is also a player in the software sector, leveraging its video presence with business intelligence applications to tackle loss prevention and risk management. It knows its way around vast databases. Nonetheless, pulling together an enterprise platform for itself was no easy task. “There were a lot of options, some of which had features I really liked,” said corporate controller Scott Bolton. “SAP did have a lot things we wanted, but Microsoft’s CRM package integrated into our existing Office software...and that was the biggest factor.”
Competitive upheaval
IDC’s Martin expects Microsoft’s new aggressive CRM play will dramatically alter the landscape over the next five years.
“This is a classic case of Microsoft leveraging its vast breadth of product offerings,” he said. “Microsoft Dynamics continues to be more and more a disruptive force in the traditional back-and -front-office applications market. Given the renaissance of current spending in ERP, SCM and CRM solutions and on-going demand, it’s well positioned to capture market share from both industry leaders and niche players.”
“Small or mid-sized businesses have the same needs as large corporations,” said Frank Falcone, CRM product manager at Microsoft Canada. “I can see this going to two-or-three-person companies; picture a real estate agent who needs to track clients and homes they’ve sold. Or even a flower shop.”
Interestingly, Microsoft has partnered with the dominant market player, SAP, to create Duet, an application which links SAP business processes and data to the Microsoft Office front end. The joint venture was extended in April and Duet 2.0 is set for release in late 2008.
This and Microsoft’s own CRM applications mean smaller companies could be Microsoft’s sweet spot. Not that SAP is sweating. In Q1 it posted a nine per cent gain over Q1 2006 for software and software-related service revenues, with similarly consistent increases across its business revenues. Worldwide, it added 1,784 accounts last year, including 100 in Canada, and posted a 41 per cent jump in smaller-company clients.
“Small companies are hitting the wall because they have maybe 12 systems, one doing CRM, something else doing inventory, another accounting and they need something to tie it all together,” said Jeff Watts, SAP’s vice-president of North America SME. “These are companies that, because of globalization, have to compete globally and act like a large company, optimizing costs and growing top-line revenue.”
More Canadian dollars coming
Supplier consolidation in the marketplace has streamlined the CRM choices available to companies, said IDC’s Martin, adding that with the dictates of Sarbanes-Oxley or Canada’s Bill 198, the enterprise application sector in Canada will see better than average growth. This will occur especially in the mid-sized business area—companies with less than 500 employees—though he said some suppliers define mid-market to include organizations with revenue between $250 million and $1 billion. “About 1,000 Canadian organizations would fit that definition.”
Currently, Martin said, the battle for top spot is between Oracle and SAP, but Microsoft is a growing factor. Will this be a case of Microsoft reverting to the mid-1980s tactics (partnering then plundering its allies’ markets) of which it was accused?
SAP’s Watts doesn’t think so. First, Duet is selling—shipping more than 300,000 seats to more than 200 customers in the nine months since June of last year. Second, market growth is making room for more players.
“We see Microsoft as a strong partner with lots of strength at the desktop,” Watts said. “But I think Microsoft is taking a different approach to us. We’re adding value because we understand our customers’ industries and know how to make stuff work when it comes to other platforms. Still, there’s a lot of room for multiple vendors and I welcome them.”
For now the big money is with Fortune 500 companies, but that market is quickly being saturated, Martin said, and the more fertile ground is downstream the companies with 100 to 499 employees.
“SAP, for example, is adopting a go-to-market strategy in the utility and energy industries and Microsoft is targeting the retail market through innovative packaging, while it also has an extensive channel servicing Canada’s small and medium-sized businesses,” he said.
So even if the big battle is between Oracle and SAP, people are not taking their eyes off Redmond.
SIDEBARS
Definitions
The enterprise applications market is a complex collection of software which ties together data from a business in real time to give managers a console from which to make their decisions. the main types follow, as defined by Wikipedia.
ERP: Enterprise Resource Planning manages a business’ assets and resources, including essentials such as general ledger, accounts payable and receivable, as well as manufacturing, inventory and human resources.
CRM: Customer Relationship Management is a broad term covering management of a business’ relationships with its customers, including collecting, storing and analyzing customer information.
SCM: Supply chain management is the process of planning, implementing and controlling the operations of the supply chain to satisfy customer requirements as efficiently as possible. it spans all movement and storage of raw materials, work-in-process inventory and finished goods from point of origin to point of consumption.
SOA: Service Orientated Architecture is an emerging concept which loosely couples different services to support the requirements of business processes and users. Network resources are available as independent services accessed easily.
Getting the right numbers
Business is in the numbers, as any bean counter will tell you. But what separates winning businesses from the rest is knowing which numbers to count.
It sounds simple enough but it’s no easy matter when your metrics are drawn from a plethora of databases housed on a collection of platforms, none of which are compatible. Just finding the numbers becomes a challenge, let alone sorting the relevant from the trivial.
What you don’t see could hurt your enterprise. If your sales department tells the warehouse to ship to a customer but doesn’t know the credit department put that account on hold, profits go out the door with the order. Or, if sales is closing deals faster than the supply chain can fill them, the result will likely be customer dissatisfaction.
It all sounds obvious, but as Thomas H. Davenport and Jeanne G. Harris point out in their book, Competing on Analytics: The New Science of Winning, only a handful of companies are really leveraging data effectively.
Analysis today tends to rely on spreadsheets, prone to input errors, siloed and lagging real-time developments, said Harris, director of research at Accenture. The convergence of the Internet, faster processing, RFID, massive data storage and the rise of software applications to manage and mine data is changing everything because the new crop of emerging ceos are MBA-educated and much more comfortable with technology.
“[Only] around four per cent of companies are really competing on analytics,” Harris said, and up to 10 per cent are working toward it. Wal-Mart, Netflix and Google are classic examples of analytically competitive companies.
Conventional wisdom held mid-sized companies could still manage with a handful of spreadsheets and the right sets of eyeballs analyzing the data—usually the bean counter or the founding visionary who was more likely to operate on gut instinct than the numbers themselves.
“But things are changing too fast,” said Jeff Watts, SAP’s vice-president of North America SME. “Most of our customers tell us they’re in a business they didn’t set out to be in five years ago and five years from now will be in a business they’re not expecting to be in now.”
ETrends Archive
