Microsoft shakes up CRM sales strategy

Microsoft is letting many more partners sell its next package of customer relationship management software and will offer it to them at large-volume discounts, according to the company.

The Redmond, Wash., giant

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on Thursday said the new customer relationship management (CRM) package, due later this year, will be called Microsoft CRM version 1.2. The company also said it will abandon its existing distribution strategy in favor of extending availability of the software to all Microsoft resellers.

Currently, only certified Microsoft Business Solutions (MBS) partners are allowed to sell the Professional Edition of Microsoft CRM 1.0, limiting other distributors to the Standard Edition of the software. However, once the new version is released, all of Microsoft's resellers will be able to market both editions of the CRM software.

Holly Holt, Microsoft's group product manager for CRM, said the company shifted its sales strategy after some customers said they wanted to work with their existing Microsoft resellers. She discarded the notion that MBS partners might no longer be able to use to their advantage the training they've been required to complete to become certified Microsoft CRM resellers.

"We think the MBS partners and our other distributors can work together," Holt said. "The MBS partners are in a better position to help users initiate the business changes necessary to implement CRM effectively, and giving customers access to CRM through more outlets creates increased revenue opportunities for everyone."

Microsoft also announced that it will offer volume-based discounts to customers that purchase large numbers of Microsoft CRM 1.2 licenses as well as other products such as its Exchange and SQL Server software. Customers are required to run SQL Server in order to use Microsoft CRM.

The response to the new distribution strategy from Microsoft CRM resellers is mixed. Ben Holtz, president of Watertown, Mass.-based Green Beacon Solutions, an MBS reseller, said he wasn't surprised that Microsoft made the move and indicated that he didn't feel threatened by the potential for increased competition.

"Since our business model is built around services revenue, this could be good for us--since there will be more customers buying the software," Holtz said. "But I could see how (MBS) resellers with a greater interest in pushing boxes might wonder how this affects them."

At least one MBS partner said he would take a "wait and see" approach to the strategy shift. Sid Lejfer, president of Waltham, Mass.-based Harvest Solutions, said he fears that some potential customers might go to MBS partners for in-depth Microsoft CRM product demonstrations, only to shop for the cheapest price once they've tapped into some expertise.

"Who knows? Maybe we'll have to start charging money for demos," Lejfer said. "I can see the value of creating more opportunity for us to sell consulting and training services. But I wonder what it will be like to compete against distributors with little to no CRM experience who might be able to charge less for the software."

Lejfer did applaud Microsoft for introducing its volume discount policy, saying the strategy could serve as a boon for both customers and resellers.

Industry analysts approved of the sales distribution move, saying it will get Microsoft's CRM products into more customers' hands. Gartner analyst Wendy Close said the new strategy should give Microsoft greater ability to compete against other midmarket CRM providers such as Best Software.

"Microsoft is making it clear that it is pushing as hard as it can to win market share," Close said. "I think this is a smart move, as the non-MBS resellers have been getting a lot of demand for the CRM products."

Close acknowledged that one drawback is that some of the non-MBS resellers may at first struggle to provide adequate support for the CRM products due to their lack of experience with enterprise software.