How come Microsoft decided to enter the CRM market? Microsoft Great Plains entered the CRM market in 1997. Our...
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first entrance was our field service application. When you think of traditional ERP vendors, the natural progression is in field service. In 1999 Siebel approached us because they were looking at a mid-market solution. They were the CRM market leader, so in Nov. 1999, we released Great Plains Siebel Front Office and that fits well for our higher-end, mid-market customers. But we have had a need to fill out our entry level mid-market CRM offerings, and once the [Microsoft] acquisition of Great Plains was completed, we merged teams and the end results is Microsoft CRM. Why did you choose to go after the mid-market and why did you choose to focus on the specific applications that you plan to offer? We have been focusing on the mid-market for 20 years. It was a natural progression. [Great Plains'] model is unique. We don't sell direct. We only go through channel partners. And we have a considerable installed base at this point, with considerable partners, so we knew this was a vastly under served market. And we wanted to round out our promise of CRM for everyone in the mid market. And that's exactly what we've done. What will Microsoft bring to the mid-market space that existing vendors don't offer? What holes can you fill? There are several things. Our mid-market customer needs are unique and different from small and enterprise-level customers. They have a need for breadth of product but not the depth or complexity of their enterprise counterparts. The solution is designed for the mid-market by being easy to deploy, easy to configure -- and it's integrated. As you know it often takes a lot of baling wire and bandages to put a lot of solutions together -- some companies are running Lotus Notes, Excel and a contact management solution. Only about 10% of the market is served with a complete integrated solution. We provide the integration into our back-office solutions for no additional charge. If I can tell you that the 50 trophies you ordered for a banquet are in stock and I can have them to you by Tuesday -- and [my competitor] can't tell you that, chances are you will buy from me.
The other thing is if you look at mid-market customers, a lot are living and breathing though [Microsoft] Outlook. It's optimized for sales people. They can put their information into Outlook and it synchronizes with Microsoft CRM or vice versa. So, they can continue to sell and not spend time doing data entry. Plus, this is a Web-based solution so there's consistent data for customer service people. Salesforce.com CEO Marc Benioff recently had some interesting comments on your entry into the market. He basically said that you're copying his company's ideas. How do you respond to that?
I haven't seen any of that coverage and I haven't ever visited with him so I couldn't comment. What we've built is based on four years in the space and the feedback we've received from customers. Much has been made of the fact that MSCRM will be the first software you'll release for the .NET platform. Exactly what does that mean for potential customers?
Let me give you an example. Say I'm a manufacturer and I have 250 employees. I work with government regulations and need some auditing done. .NET provides the opportunity to easily connect with different industry applications and other important business process operational things that customers are using. Can I hook to the two other things I need to have to run my manufacturing business well? Or do I have to build a bunch of stuff with to connect it all with? Some have speculated that this is only the beginning. They think you will eventually set your CRM sights on larger organizations. Is that true?
With only 10% of the market currently served with CRM apps at this point, I think we have the opportunity to add functionality to the mid-market. So, if we're setting our sites it's out in the mid-market as opposed to up in the market [size]. The Great Plains acquisition gave Microsoft some footing in the enterprise software space. Is this CRM announcement part of an overall move into the enterprise software arena? Should the Oracles, SAPs and PeopleSoft's be looking over their shoulders?
The Great Plains acquisition was a nice entrance for Microsoft into the business applications space, but keep in minds that Great Plains does serve the mid market. We still have a huge opportunity in the mid-market and will continue to focus there. I see where at least one ASP has already come forward and said they will host MS CRM.
We will have the opportunity to deliver both on-premise or through a hosted environment. There's incredible value [to going with an ASP]. If you don't want to do a lot of infrastructure support of have a large IT staff hosted partners provide huge services to customers that are comfortable with data sitting outside of their four walls. We're finding mid-market customers are beginning to open up to that possibility.
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The needs of the enterprise space are so different from the needs of the mid-market -- so we don?t spend a lot of time focusing on those [vendors]. It's a different model. It's different from start to finish. That?s why we think Microsoft CRM will be so competitive because it is designed for the mid-market and not a pared down version of an enterprise application. How do you think your entry into the CRM market will affect your CRM partners, like Onyx and Pivotal?
I think it provides an opportunity for all of us to go out in the market. I think they serve a market space above ours. I think we have the opportunity to ensure our collective customers have great CRM regardless of market size. Do you plan to acquire a CRM vendor in order to gain more footing in the space?
I couldn't comment on an acquisition that's hasn't been announced. Does that mean you're exploring something?
We are not exploring the possibility of acquisitions at this point.