With the release of Dynamics CRM 3.0, its clear that Microsoft is determined to become a major player in the customer relationship management software sector.
It also appears that CRM 3.0 is destined to become a leading contender in the field, at least in the small and midsize markets, if only because Microsoft already has a large captive audience of customers who are working with Windows, Office, Outlook and SQL Server.
Its quite likely that Microsoft will sell plenty of CRM seats to companies that really arent able to afford the heavy implementation and customization costs that are typically required to install CRM packages from SAP, Oracle, PeopleSoft or Siebel Systems.
Not only does Microsoft pose a competitive challenge to the high-end software companies, but it also represents a serious challenge to the scrappy lower-end CRM providers such as Salesforce.com, NetSuite and RightNow Technologies.
These companies have been pitching the ease of implementation for their on-demand CRM applications, particularly for SMBs that cant afford to spend months and tens of thousands of dollars on installation and customization consulting services.
The whole point of shifting to an on-demand application is to let the hosting service deal with the IT management and integration issues.
Microsoft is counting on ease of use and integration with the familiar Outlook interface to win over new customers.
On the face of it, Microsoft seems to have a winning hand. But ease of use only asserts itself once an application is fully deployed and running reliably.
Microsoft is going to have to show that deploying CRM 3.0 is a lot easier to deploy than the earlier version to prove that all those important total cost of ownership issues wont get out of hand.
The problem is that Microsoft will still be relying on partners and resellers to sell and support the product.
It claims that CRM 3.0 delivers low total cost of ownership because it can be configured and customized without calling in the services of application programmers.
But it remains to be seen whether that holds true for some smaller businesses without extensive IT resources that want to implement CRM 3.0.
CRM software isnt typically sold and installed like a shrink wrapped box of Microsoft Office for Windows. Its not necessarily as simple as taking a CD out of the box and booting up the installation routine.
Jock Putney, CEO of MDServe Inc., a developer of healthcare information systems based in Houston, said deployment costs and reliability issues were the key reasons why his company switched from Microsoft CRM 1.x to Salesforce.com.