Microsoft Rolls Out a New Brand and a New Version: An Interview With Brad Wilson

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In early December 2005, Microsoft introduced the long-awaited update to its CRM solution, along with a new brand for its business systems, Microsoft Dynamics. Just before the official release, CRMGuru founder Bob Thompson spoke with Brad Wilson, the company’s general manager for Microsoft Dynamics CRM, about the new release, the new brand and the company’s approach to the market.

This Inside Scoop interview, which was recorded Nov. 10, 2005, was edited for clarity.

Bob Thompson
I’d like to welcome to our Inside Scoop program today Brad Wilson, who is general manager for Microsoft CRM. Our topic will be Microsoft CRM strategy and how it fits into Microsoft’s overall game plan. I’m sure we’re going to touch on a number of things that will be interesting to our CRMGuru members, including their game plan in the SMB market and on-demand. So without further ado, Brad, I’d like to welcome you to our program. Thanks for being with us.

Brad Wilson
Well, thank you, Bob.

Bob Thompson
Just to kick us off, could you give us a quick backgrounder on things you’ve been doing in the software business and what you are charged with doing at Microsoft?

Brad Wilson
I’m the general manager for Microsoft CRM, so I’m responsible for all of our worldwide P&L around the product in terms of what we bring to market, how we bring it to market and how we get our field and our partner network selling. I’ve been in CRM for about the last 11 years. I’ve recently run worldwide marketing for the PeopleSoft CRM Group. Prior to that, I ran worldwide product marketing for Epiphany and spent about a dozen years at Hewlett-Packard in a variety of both development and marketing roles.

Bob Thompson
At Microsoft, are you in charge of, or do you have influence over, the channel strategy, as well?

Brad Wilson
Yes, I do. We have a broad channel strategy within Microsoft. It includes resellers, system integrators, embedded resellers, software ISPs. We have a very broad number of channels through which we sell our products.

Bob Thompson
Let’s start with the main business that is sort of the container for Microsoft CRM these days. I understand it’s now called Microsoft Dynamics. Can you tell our members a little bit about why that name was developed, what it’s supposed to mean and the products that are included within that brand?

Brad Wilson
Microsoft Dynamics is the new brand for Microsoft Business Solutions. There’s still an organization within Microsoft called Microsoft Business Solutions, but “business solutions” wasn’t the best way to communicate a single brand around which we could build momentum and awareness. Think of a great brand like Microsoft Office or Microsoft Windows. Microsoft Dynamics is now the new brand that we’ll be advertising heavily, as how we bring business solutions to market. Before Dynamics, Microsoft Business Solutions was both the organization name and the public facing-brand name. Dynamics, now, is that public-facing brand name.

Bob Thompson
And the products included in there will be what?

Brad Wilson
There are several products: Microsoft Dynamics AX product, which was formerly known as Axapta; the Microsoft Dynamics NAV product, which was called Navision; the Microsoft Dynamics GP product, which used to be called Great Plains; Microsoft Dynamics SL, which was called Solomon; and Microsoft Dynamics CRM, which is a core part of the Dynamics’ overall brand and will be called both Microsoft Dynamics CRM and Microsoft CRM going forward.

Bob Thompson
Let’s talk about CRM, specifically. What is the current target for that? The reason I ask is that I wonder if it has changed or shifted a little bit over the last couple of years. It seemed like it came into the market being kind of an SMB but not too much of the “S.” I’m a little fuzzy about where, exactly, you’re positioning in selling this, especially Version 3. Where is that going to be sold?

Tuning up the low end

Brad Wilson
With Version 3, we are absolutely addressing every segment and addressing them effectively, from small businesses to large enterprises. This is a year, with Version 3, where we’re making a specific move into smaller businesses through our small business edition, as well as rapidly moving into larger deals, where we’re selling hundreds or thousands of seats to large enterprises around the world.

Bob Thompson
Define a small business for me in Microsoft terminology.

Brad Wilson
A small business might have 25 or fewer PCs or computers within an organization. And within that, some number of those people would be the people who would use the CRM system.

Bob Thompson
So, clearly, anything under 100 total employees, you’d say it would be a small business, right?

Brad Wilson
Our breakpoint tends to be a bit smaller than that: 25 PCs in an organization or lower.

Bob Thompson
And you see this as a key market for Microsoft CRM?

Brad Wilson
We think it’s, largely, an untapped market for true CRM. People have had a range of basic contact management solutions just from managing contacts and very basic calendaring. They really haven’t had a workflow-driven CRM system that could really help people within a small business collaborate around customer interactions.

Bob Thompson
The next level up, how do you classify that, and what’s different about it?

Brad Wilson
Well, mid-market firms might range from 25 to 1,000 PCs in an organization. That’s an area that we’ve been focused on for a long time with Microsoft CRM and an area where we’re continuing to focus, both in terms of functionality and also in terms of really bringing more and more channel partners on board who can deliver solutions in that space for us.

Bob Thompson
Is it fair to say that with Version 3, you were tuning up the low end of the product line a little bit?

Brad Wilson
Definitely. We created a new version of the product. That’s called the Small Business Edition, and it deploys on the Microsoft Small Business server. It deploys in 10 clicks or less and gives you the full power of a CRM solution, but it’s designed to be very simple to use, simple to manage and simple to maintain over time.

Bob Thompson
Is there anything you’ve done in the more mid-market-focused product to make it more attractive to that space or go up higher than you used to?

Brad Wilson
Let me first address the enterprise, if you don’t mind, Bob.

Bob Thompson
Sure, go ahead.

Brad Wilson
On the enterprise space, we’ve done a lot of platform extensions to the product that make it very easy to configure and customize the application for very complex environments. For large enterprises, we’re seeing deals at and above 1,000 seats of CRM, itself, where customers are looking for great CRM delivered through an Office and Outlook interface, a flexible platform and a reliance on web services and other standard technology underneath.

Bob Thompson
So it’s really “S,” “M” and “L.”

Brad Wilson
Absolutely.

Bob Thompson
Would you care to guesstimate how your business is going to be distributed, let’s say, for calendar year 2006? Is that something you can talk about?

Brad Wilson
Well, we can’t give you specific numbers, but I will tell you we’re going to have incredibly strong balance across small business, mid-size companies and large enterprises, so you won’t see any one of those being small or lagging. All three of those will be real areas of growth for us.

Bob Thompson
Let’s dig a little bit deeper into the functionality question. We did a study over the last year. And I’ve talked to a lot of partners, especially those that deal with Microsoft, as well as other partners in the SMB game. And basically, what I’ve been seeing in our survey and through the interviews that I’ve done is that Microsoft CRM—the initial version or the 1.2 version—was not quite ready for prime time. I don’t want to overstate that, because, obviously, you’ve had some success with it. But there’s definitely been a feeling in the market that more was needed in terms of functionality. It wasn’t quite what people were looking for. So you’ve got Version 3. I wonder if you could outline for us what’s the new news in the functionality front that will create a more satisfied market for Microsoft CRM?

Complete marketing automation

Brad Wilson
As you know, CRM’s always relied on three major pillars: sales, service and marketing. With Version 3, we’re finally going to deliver a full CRM suite with Microsoft CRM, by delivering a complete marketing automation module.

Bob Thompson
That’s one bit of new news.

Brad Wilson
That’s one bit of new news. What’s nice about that is it has two different modes. One’s for traditional marketing users, and one’s for casual users who just want to define a quick campaign, like, let’s say, a sales manager wants to define a quick campaign. They can do so and kick off all the activity that has to get done to follow up and track and measure that quick campaign. So the marketing automation module has both advanced and casual modes for people.

A second big thing we’ve added is a new service-scheduling module. It handles complex scheduling where you might need three people in a conference room or two people, a truck and a piece of equipment. It’ll help you find the least busy time, the best fit time.

Bob Thompson
So a field service application.

Brad Wilson
It’s perfect for that sort of thing or even for professional services, where you’ve got to get a team in a room and you’ve got to juggle schedules to do so.

Bob Thompson
Interesting. I haven’t heard of anyone else doing something quite like this. What drove that particular requirement?

Brad Wilson
Well, we worked with a lot of firms that said that a big problem for them was this problem of juggling calendars and juggling resource availability. The ability to look into multiple calendars, try to find the right fit across these things and do them in a non-manual way is a huge timesaver for a lot of our customers.

Bob Thompson
Did you make any other changes to your customer service and support functionality?

Brad Wilson
There are lots of changes throughout the application, in terms of simplifying the UI, making it more roles-based, so specific individuals see just the pieces that they need to do their job. We’ve also delivered our service application through a standard Outlook user interface. We’ve put suggestive help throughout the service, sales, marketing applications, so no matter where you are, it will pull up the right, relevant information for you. So it’s kind of always at your fingertips: what you need to know based on what you’re doing.

Bob Thompson
These are a lot of usability improvements. In terms of basic things like incident tracking and management forth, anything notable there?

Brad Wilson
There are a lot of other things. I probably wouldn’t bucket them underneath that, specifically, but we’ll surface that as we go through this.

Bob Thompson
All right. How about in the sales area? What’s the new news there?

Brad Wilson
There’s a lot of news in the sales area, and a couple of things kind of come across the product. One of those is where we’re moving away from our old reporting structure to SQL reporting services, which gives us a very broad platform for doing analytics across sales, service or marketing. Within sales, itself, a lot of our users use offline synchronization for mobile sales, and there’s an entirely new synchronization engine underneath the product now, which makes it extremely high speed. It’s all roles-based; it’s all extremely secure; and it does background synchronization to make sure you don’t have that big burst of synch traffic when someone wants to log off or log in.

Bob Thompson
I’m getting the impression that you updated the marketing module, specifically. You’ve made some refinements to sales and service. But there’s something else that you’ve talked about several times. It’s more about the usability, being able to do roles-based processes, I suppose.

Brad Wilson
Yes.

Bob Thompson
And a better, tighter integration with Outlook and Office.

Brad Wilson
Yes. The one thing you have to understand about our product is that we’re fundamentally different from other CRM products. Rather than saying, “Here’s a complex CRM app; can we train people to go there and use it?” our whole approach starts with people who live with and work in Microsoft Office and Microsoft Outlook all day. And if we put just the right amount of CRM into that environment, we’re going to be successful.

Bob Thompson
Well, I think it’s hard to argue with that approach. One might ask why that didn’t happen from Day 1, because I definitely heard from some of your competitors who make the claim that, “We integrate better with Outlook than Microsoft CRM does.”

Brad Wilson
I’m trying to abolish the phrase on our side, “Outlook integration.”

Bob Thompson
Why’s that?

Brad Wilson
Because you shouldn’t have to have a different application. CRM should really be a natural extension of your existing work style. With 3.0, I think that if you look at the product, you’ll find that we really do deliver on that promise that you can just live and work where you’re already used to doing your job all day long and just get CRM delivered in the right size slice for you. It’s not a matter of cutting and pasting or synchronizing information, it’s literally built into the Office and Outlook environment.

I’m the only vendor in the market who really doesn’t mind if you forget you’re using my CRM application. I’ve got a lot of customers who say their users don’t know where Office and Outlook start and stop and where CRM takes over. That’s actually a really good thing.

Bob Thompson
It seems like, over the long term, that’s got to be one of the biggest advantages you’ve got going for you. You’ve got this huge base of Outlook and Office users, and the more you can leverage that, the better.

Brad Wilson
Yeah, and I think people should focus on the strategy around CRM and not around mastering a CRM tool. Different kind of people need a little or a lot of CRM in their day, and it’s our job to make sure we put that where they are, as opposed to trying to lure them into some other applications.

Adoption

Bob Thompson
I’d like to shift gears a little bit and talk about sort of more of the market issues surrounding Microsoft CRM and also touch on the on-demand trend. Can you give me some quick stats on how Microsoft CRM has been adopted in the two years or so that it’s been in the market?

Brad Wilson
Well, we’ve been a very fast-growing product. We have about 5,500 customer accounts right now and over a 150,000 users. It’s grown very fast. And that’s on a worldwide basis. We’ve been sold to date in 16 languages. With a new release, we’ll be in 22 languages, taking us pretty much into every market in the world. We’ve been growing very, very fast.

We do see within market segments a very fast growth in small business. I think that bringing complexity and price points down to fit a small business market is a core part of our message. We’re seeing small business growing very fast and mid-markets growing very fast, as well. I think overall enterprise CRM spending is not growing very much, but Microsoft’s share of that market will be growing incredibly fast, as traditional enterprise vendors struggle and transition and merge.

Bob Thompson
When you look at approaching 6,000 customers over the first couple of years that Microsoft CRM has been in the market and with, I think most would agree, a product that is like most released products, it’s got a lot of room for growth.

Brad Wilson
Right.

Bob Thompson
Do you expect to see similar growth over the next year or two?

Brad Wilson
Oh, I think we’re just scratching the surface right now. Our opportunity to grow at extremely high rates over the next three to five years is very, very good right now. I think you’re going to find that there is a very large market of people who, all things considered, would prefer to have CRM delivered through an Office and Outlook interface, natively, not through integration. I think, if people were honest in the industry; if most people who build CRM products would admit it; if you could reboot the whole industry, most of it would be a plug-in off an outlet. It wouldn’t be a separate application. That’s the key to usability and adoption.

Bob Thompson
Let’s talk about the market acceptance or market strategy. It seems to me that it has taken an awful long time to get the second major release out the door. And Microsoft skipped Version 2. Now, you’re coming out with Version 3, and a rumor has it that it’s coming out a bit earlier than planned. But nevertheless, we’re still talking about a couple of years.

Brad Wilson
Yeah.

Bob Thompson
Can you tell me what happened? What went wrong? Why did it take so long to get Version 2 out? Every software company goes through this. You’ve got to get Version 2 and then Version 3 out, and everything has to be improved from Day 1. What was the problem?

Brad Wilson
What happened with Version 2 was that we took it to alpha about a year ago. Let me give you some timelines. We brought out our 1.0 version in early 2003l brought out our 1.2 version, which brought the additional 15 languages online, in early ’04. At the end of ’04, we brought 2.0 Alpha out to about 100 customers and partners, who took a close look at it and said, “This is pretty good, but you know what? If it did the following things, it would be great.”

We looked at what they were requesting from us and made the hard call to put another half a year back onto our engineering calendar. We put six more months into the engineering effort and added a whole lot of things that we think have taken this from being a solid release to a release that has a lot of partners looking and saying, “Wow, this is the one. This is the one that’s going to go.”

Bob Thompson
So you thought it was just better to bite the bullet and make it better and not just try to get it out the door on a certain schedule.

Brad Wilson
Absolutely. I think that that was a very wise decision on our part, to take it to a level where partners aren’t just saying, “Eh, it’s good.” They’re saying, “Wow! I can’t wait to have my hands on this product.”

On-demand

Bob Thompson
But this kind of leads me to one of the other topics on my mind, which is the on-demand trend. The on-demand proponents—I’m talking about salesforce.com, RightNow and NetSuite and a whole bunch of others that aren’t getting quite the same press—are saying, “Look, not only don’t you have to worry about installing it, but also you don’t have to wait for upgrades.” In fact, and I’m exaggerating here, but it’s like, “We’re on release 37 in the last three months.” Think of Amazon.com. You never have to upgrade Amazon.

We all heard these stories, and now we’re looking at Microsoft continuing with a pretty traditional business model of putting out software and shipping it through distribution. Tell me why on-demand isn’t better than that.

Brad Wilson
There are a couple great points in your question, Bob. One thing I would say is: This isn’t Amazon; this is a business application with all-around process consistency. Most businesses, if you look at them, don’t want their CRM system changing every three months. They really don’t. And they can’t afford to have it change that fast. I think that what people really want is to get a system in place that supports their business processes and offers a high degree of flexibility for them. I think a lot of people that have been touting releases every two or three months are really just making up for their lack of functionality in the applications. They’re turning a weakness into a strength.

Bob Thompson
But what would Microsoft have done differently if you had the ability to put out releases? Could you have given more frequent point releases and kind of work your way up to Version 3? I know I’m being hypothetical here, but t the other argument is: Don’t keep waiting. You can upgrade on a more regular basis. RightNow, for example, does allow customers to schedule their upgrades. They don’t force them down their throat. Why not take that approach?

Brad Wilson
Our approach is different than that. We think that releasing a stable platform to the market and letting our partners develop solutions around a stable platform is the best approach to get specific solutions by region, by vertical and by segment size.

Bob Thompson
You’ve done a lot of research with your channel community, and I assume that they would back up what you just said.

Brad Wilson
Absolutely.

Bob Thompson
Let’s talk about Microsoft’s on-demand plans, whatever it is that you can share with us.

Brad Wilson
Sure.

Bob Thompson
We’ve news of Windows Live and Office Live, I think that’s right.

Brad Wilson
Yeah.

Bob Thompson
That just naturally leads one to suspect that there’s going to be Dynamics Live any time soon. What’s the real story about Windows Live and Office Live? What could that mean down the road for business apps?

Brad Wilson
Let me tell you our short-term 3.0 plans, and then I’ll tie that back into the long-term company vision. For Microsoft CRM 3.0, we’re introducing a new subscription-based pricing model, which lets people pay us by the month for the use of our software. But we’re not directly hosting that; we’re making this available to all of our partners worldwide. My intention is to have partners doing hosted Microsoft CRM solutions in Turkey, South Africa and Australia and Sweden and the U.S. and elsewhere. With our model, there’s no commitment, and no one has to commit to any length of time. If you use more, you pay more. If you use less, you pay less. If you stop using it, you stop paying us. There’s no lock in, and it’s easy to get started with the system.

Bob Thompson
But you’re doing this through partners. I remember one other time in the past, I found that one of your bigger partners is ePartners, is that still true?

Brad Wilson
That’s right.

Bob Thompson
So they take your software, host it and, basically, create the on-demand relationship with their clients.

Brad Wilson
That’s right.

Bob Thompson
How many of these partners do you expect to have over the next year or so? Are we talking tens or hundreds?

Brad Wilson
Well, it’ll be in the hundreds, no question. And some will be small, and some will be large. But we’ve got over 2,000 partners in our network right now, and I think a large number of those will make this a business model that they offer their customers.

Bob Thompson
Why not MicrosoftCRM.com? SageCRM’s doing that. Obviously, salesforce.com has made that popular. The market seems to be voting for a heavily branded and marketed on-demand solution that’s by a known brand. Obviously, Microsoft would attract a lot of attention if it chose that route.

Brad Wilson
By our offering the Microsoft-branded CRM solution through our partners, people do get a sense of stability behind the R&D investment and the support network that we have behind our partners. We do carry our brand when our partners host our offering. We don’t become completely anonymous behind somebody else. We do stand behind our partners.

Bob Thompson
So you mean like Intel Inside? Along those lines?

Brad Wilson
That’s not a bad analogy, Bob.

Bob Thompson
If you end up using that, I want some credit for it, OK?

Brad Wilson
Well, we’ll make sure you get some. But right now, we think that our partners can go faster and wider than we can by simply having rack space rented somewhere and running it directly. So I can have hosting partners around the world create very specialized applications for financial services or for engineering firms and do it in 22 languages around the world within a matter of months. So we can scale out a very broad number of on-demand services based on our software around the world much faster than we could go directly.

Bob Thompson
Is the technology designed such that it could be deployed in a multi-tenant fashion? Or is it single image or single instance per client, which, as we all remember, got a lot of the early ASPs into trouble.

Brad Wilson
Well, we are definitely moving into multi-tenancy in our product roadmap, but today, it’s single tenant.

Bob Thompson
So Version 3 will be single tenant?

Brad Wilson
Version 3 is single tenant, and it’s more geared for deployments of larger numbers of seats, 30, 50, 100 more seats. It makes more sense.

Bob Thompson
You tend to have a dedicated server, anyway, for something like that.

Brad Wilson
Yeah. We’re not trying to create a market where you pick up two and three seats at a time, and we do have our small business edition, which is based on small business servers and is really geared for serving those kinds of service markets.

Bob Thompson
I guess “watch this space” is a good way to wrap up our discussion about on-demand. It just seems like there’s no doubt that it is gaining momentum.

Brad Wilson
We’re always going to focus on how we can bring out the right mixture of delivery models through our partners and to our customers. I think that right now we have the best approach with what we’re doing.

Bob Thompson
Well, you also have a huge and very important channel, and on-demand has, potentially, a disintermediation effect with channel partners. Even if it doesn’t, it creates a lot of fear. I would imagine that that’s one of the things you think about, in terms of whether you bring in a branded solution or not, trying to not throw out your channel partners that have helped Microsoft get to where it is today.

Brad Wilson
To be clear, we want to promote a very strong choice message that if you want it on premise, we’ll deliver it on premise through our partner. If you want it hosted, we’ll absolutely provide the backbone and platform, which our partners can run. I’ve been around the world encouraging every single partner to see how a hosted offering could add value to their customer base. So we’re not at all dismissing or ignoring the hosted trend.

Bob Thompson
You do it through your partner channel.

Brad Wilson
We want to leverage our strength and do it in a way that delivers value to our community.

Bob Thompson
OK. Fair enough. Let’s talk about your channel partner relationships as we get ready to wrap up here. Our research finds that it’s what I would call good but not great. You have had some issues reported to the media and elsewhere about potential over-distribution or too much competition amongst partners and just some concerns about who’s doing what in the Microsoft CRM space. Can you comment on that? What are you doing, specifically, to make sure that your channel partners—they are extremely important relationships, as you’ve acknowledged here—are comfortable doing business with Microsoft instead of Sage and some other channel-focused type CRM providers?

Brad Wilson
I think a couple of things will address this. One is that Microsoft CRM 3.0 is such a compelling product that you’re going to find our channel partners will have a much easier discussion with customers around selling this, and it’s going to be a clearly better solution than other products they could be selling. I think that what you’re going to find is 3.0 will dramatically improve our partners’ ability to win more deals and to service more customers.

A second thing is we are actively encouraging our partners to look at how they can specialize in a vertical or in a region. We have so many partners, the last thing we would want to do is have them all focused on one narrow thing and competing for the same number of deals in a space. We want our partners to spread out and address professional services, financial services, manufacturing travel and tourism, but spread out and really bring a suite of solutions to market that can address the full market and not just a narrow slice of it.

Bob Thompson
One conclusion I’ve reached in doing our recent study was that the main weakness that Microsoft has with its partners and its customers was really on the product side. There was a lot of other good news, or at least competitive news, in terms of the service, support, pricing and what have you. There were a number of things we looked at, in terms of relationship help. But the product side of it really stood out as being a weak area, and it certainly sounds as though, with Version 3, you’re taking your best shot at addressing most, if not all, of those issues.

Brad Wilson
I’d certainly encourage you to do a spot-check with the people you talk to who’ve had a good look at the product and just get their assessment, because everyone looks at it and says, “You know what? This is the one. The prior release was a very good initial release, but this is the one that truly delivers what people think of when they think of Microsoft and CRM in the same sentence.”

Bob Thompson
Let’s close on kind of a strategic note if we could. Looking ahead the next, say, five years and thinking about what the real possibilities are for Microsoft CRM in this business applications area, in general, what do you think is going to be the biggest obstacle to really realizing that potential? And conversely, what is the real opportunity? Can you be, literally, the biggest and the best in this particular space?

Brad Wilson
I think the biggest challenge we have is the amount of opportunity that we have right now, because it’s rare to find a firm that has the kind of global reach that we have; that can really address small business, mid-size business and large enterprises; can really support an ecosystem of people delivering it on premise and through a hosted model; and do all that in 23 languages and, really, in every vertical around the world.

I think what you’ll find from us is that the number of things we could do right now exceeds some of the things we can do right now, just from a pure amount of resources. I think you’ll find that we are not going to be capped artificially by any sort of limitations. It’ll take us a while to become equally good in every single country in the world in terms of building a partner network, training them all up and getting everyone selling effectively. But in the meantime, you’re going to see our business growing at a tremendous rate in the next three to five years.

Bob Thompson
It sounds like you’ve got plenty to keep you busy there, Brad.

Brad Wilson
We certainly do, Bob.

Bob Thompson
I appreciate your time on this Inside Scoop interview today. And I wish you the best of luck in your adventure there with Microsoft Dynamics CRM.

Brad Wilson
Thanks, Bob.

Brad Wilson
Microsoft
Brad Wilson, general manager of Microsoft® CRM for the Microsoft Business Solutions Business Group at Microsoft Corp., has more than 20 years of experience in the technology industry. Before joining Microsoft, he was the worldwide vice president of marketing for PeopleSoft. Earlier, he held senior management roles at Epiphany.

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