Microsoft Seeks Broad Market for CRM 3.0

By John Pallatto  |  Posted 2005-12-06

Microsoft Seeks Broad Market for CRM 3.0

Microsoft launched its bid to make customer relationship management more pervasive in companies large and small with the release Tuesday of its Dynamics CRM 3.0 suite.

The new version, which Microsoft has been working on for more than three years, includes close integration with the Outlook and Office application interfaces.

It is also designed to allow the CRM applications to be rapidly integrated with the customers data and business needs, said Kevin Faulkner, senior director in charge of product marketing for Dynamics CRM 3.0.

The package also provides easy ad-hoc query and analysis features, a quick marketing campaign design wizard, rapid Excel spreadsheet integration as well as service scheduling and dispatch among its many new features.

Microsoft is marketing and pricing the product to appeal to SMBs (small and midsize businesses), but it isnt going to stop there, Faulkner said.

"We really want to take CRM out and make it very pervasive, and we think we are the right company to do that," Faulkner said.

"But we are seeing strong demand on the enterprise side as well," he said. The company is making "multi-thousand-seat deals" for CRM 3.0 at the same time it is marketing to the SMB segment, he said.

Click here to read more about how Microsoft has integrated CRM 3.0 with Outlook and Office.

The English version of the product was released Tuesday. Microsoft also wants to rapidly roll out the Dynamics CRM globally by releasing Dutch, French, German and Russian version of the product by Jan. 17. Microsoft plans to release versions in 17 additional European, Middle Eastern and Asian languages over the next few months.

Microsoft is making Dynamics CRM 3.0 available in a Professional Edition and a Small Business Edition.

The Professional Edition is priced between $622 and $880 per user and between $1,244 and $1,761 per server, depending on the feature set selected.

Small Business Edition prices range from $440 to $499 per user and between $528 and $599 per user.

A key inducement to implanting CRM 3.0 is that Microsoft has extended the package beyond sales and service automation to include marketing automation, said Liz Herbert, an analyst with Forrester Research Inc. in Boston.

This factor, along with Microsoft Outlook integration and improved integration and customization features "will allow it to compete better in the large enterprise segment," Herbert said.

CRM 3.0 is still "at its core an SMB product, but I would expect that with large enterprise it would start as a divisional and departmental product and then move deeper into the enterprise," she said.

Microsoft is also going to allow partners to offer CRM 3.0 as a hosted, on-demand application service. But Herbert noted that this isnt a full-scale, multi-tenant software as a service. The partners will be offering individual installations that they host on behalf of each customer, she said.

So while it doesnt present a strong direct challenge to companies that are providing true, multi-tenant on demand CRM applications, it addresses the needs of customers who dont want to deal with managing the IT resources required to host the application on their own sites, she said.

Microsoft customers said the close integration with Outlook and Office is a critical factor in their decision to work with CRM 3.0.

Next Page: Making CRM pervasive.

Making CRM Pervasive

Corillian Corp., a producer of online banking software to large banks and credit unions, is adopting CRM 3.0 to replace a legacy package, said Greg Hughes, Corillians director of IT and security operations.

The new version "is a world of difference over previous versions," Hughes said. The "tight, two way integration" between CRM 3.0 and Outlook along with a "flexible, yet intuitive interface" is very valuable to the company, he said.

"Making it work the way we work is fairly easy from installation to configuration to customization," he said.

"You dont have to involve a lot of people, such as development engineers or programmers," to customize the applications, he said.

Currently about 40 people are using CRM 3.0, and Hughes said he expects this will steadily ramp up to between 200 and 250 of the companys 300 employees, he said.

Corillian is rolling the product out in its security product division.

"We chose a portion of the company where there was a strong need and where we could really get our feet wet," to learn how to use the product before extending it to the rest of the company, he said.

Click here to read why Microsoft will rely on partners to provide on-demand versions of its CRM package.

People want to be able to use CRM with the applications that they are used to doing, and most people are used to working with the Microsoft Outlook and Office platforms, said Long T. Duong, CRM practice principal with Interlink Group Inc., a Microsoft Gold certified CRM resellers based in Bellevue, Wash.

"The CRM product is built on the Microsoft platform, so you are using what you already own, from servers up to the desktop," Duong said.

This enables CRM users to have "one-click access to important data like sales orders or any kind of transaction information" within a unified interface, he said.

Another key factor is that customers dont have to call the services of a programmer to configure and extend the system as their business needs change, he said.

As a result, Microsoft has "created a value proposition for customers to maintain and evolve their CRM system" so it remains useful over the long term, Duong said.

The time Microsoft has taken to develop CRM 3.0 has generated a lot of customer interest and pent-up demand for the product, Duong said, based on what he has seen from the preview sessions Microsoft and his company have presented.

Analysts on Monday said it was apparent that Microsoft is ready to make a serious bid to become a major player in the CRM sector, especially in the small and midsize corporate market.

Its been years since Microsoft made its first foray into CRM with its 1.x product, and its clear that the new product is significantly stronger than the earlier versions, said Rob Bois, an analyst with AMR Research Inc. in Boston.

Microsoft is making an aggressive bid in the small and midsize market, where companies such as have been major players, and that "hasnt seen a whole lot of competition," Bois said.

Seibel Systems Inc. has also been a major competitor mainly in the enterprise market, Bois noted.

But he indicated that customers are currently wary about moving to Seibels CRM On-Demand product while it is in the throes of being acquired by Oracle Corp.

This provides a major opportunity for Microsoft to win new customers in the SMB sector with a product that is closely integrated with Outlook.

"We are continually hearing from CRM users that Microsoft desktop tool integration is a necessity," Bois said.

With CRM 3.0, it appears that Microsoft is "hitting the sweet spot" in terms of providing Outlook integration in a package designed for SMBs, he said.

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