Microsoft, Siebel Part Ways On CRM; Great Plains-Siebel Bundle To End

The software offering, which pairs Siebel CRM with Great Plains accounting for midsize companies, has been offered for years. The Great Plains-Siebel relationship predates Microsoft's acquisition of Great Plains last year for $1.1 billion.

Microsoft and Siebel have been negotiating a contract extension for months--MS-CRM Product Manager Holly Holt was at Siebel just three weeks ago--but apparently no deal could be hammered out. The current contract lasts until the end of the year.

Both companies remain committed to the midmarket, but "Microsoft Business Solutions' midmarket relationship with Siebel is changing to reflect a mutual business decision to not renew the resale agreement of the Great Plains Siebel Front Office Product," said a Microsoft representative. The Microsoft Business Solutions group, headed by former Great Plains CEO Doug Burgum, includes Great Plains, Navision and other brands in the enterprise application space.

"MBS and Siebel are taking care of current customers and honoring support and enhancement contracts," the Microsoft representative said.

Siebel could not be reached for comment.

The Microsoft-Siebel relationship has been severely strained by Microsoft's high-profile attempt to enter the low-end CRM applications space. CRN broke the news of Microsoft's CRM gameplan last August. While Microsoft executives swore repeatedly that MS-CRM would target small companies--the target audience is companies with 25 employees or more but without a dedicated IT staff--most onlookers expected the company to quickly push upstream into larger corporations. That is where Siebel's bread is buttered.

Most current Great Plains solution providers expected the companies to work out a deal under which the bundle would continue. One New York -based solution provider said Siebel makes a great enterprise product but has little understanding of the SMB space.

Siebel "was trying to put an elephant into an ant suit,'" he noted.

On the other hand, a West Coast solution provider said he wants to continue his Siebel--as well as his Microsoft Great Plains certification-- because Microsoft has yet to prove it can offer all that midmarket wants in MS-CRM.

The ending of the formal Siebel deal highlights Microsoft's conundrum. To maintain its historical double-digit growth rates, the company has to branch out into new areas. But those areas--CRM, ERP and supply chain management--are key spheres of influence for Microsoft ISV partners including SAP, Siebel and PeopleSoft. They are the very vendors Microsoft needs to prove Windows and .Net are ready for the enterprise.

The news comes as Microsoft is readying the beta two of MS-CRM, which will go to a few dozen solution provider partners in September, the representative confirmed. More details about MS-CRM will be disclosed at Stampede, the annual Great Plains reseller conference next month. A wider beta, targeting hundreds of partner testers, is slated for October, she added.