Microsoft Wages Latest Market Insurgency with CRM

With the recent launch of its Customer Relationship Management (CRM) Suite 1.2, Microsoft Corp. is once again sticking to its strategy of launching the business equivalent of a guerilla insurgency in yet another software sector.

For the past 20 years, Microsofts strategy has been the same whether it was in the market for word processors, spreadsheets, desktop application suites or web development tools.

Redmond, Wash.-based Microsoft was never first in the market, but it always ends up being one of the last combatants still standing.

For now, Microsoft CRM doesnt look to be a serious threat to the established enterprise CRM software producers like Siebel Systems Inc., PeopleSoft Inc., SAP AG, Oracle Corp. or Salesforce.com. Thats because the Microsoft CRM suite is currently aimed at small- and medium-sized businesses that really arent in the same league with the enterprise vendors.

This situation will inevitably change with time.

The key attraction of Microsoft CRM Suite is its integration with business and office automation applications, including Microsoft Exchange Server 2003, Microsoft Office 2003, Windows Server System 2003 and the Microsoft Small Business Server. This integration makes it easy to move data from these applications into the CRM suite. Dragging and dropping sales lead information from Outlook emails, for example, is a lot easier than writing code to transfer the same information to other enterprise CRM systems.

For a closer look at Microsofts SMB product launch plans, check out the Microsoft Watch article "Microsoft Sets Its SMB Priorities"

here

This is a decisive factor for a medium-sized business that wants to gain some of the business advantages of CRM, but wants a lower costing, relatively simple system that doesnt require a large amount of IT maintenance and support.

The browser front end to these CRM applications also means that there will be a competitive challenge to the hosted CRM services including Salesforce.com, Salesnet Inc. and Siebels Upshot OnDemand.

Microsoft CRM certainly doesnt look like a threat to the established companies if you compare features and functionality. At this point Microsoft is just offering the essentials: decent contact management capabilities, customer service features and sales tracking. Its not making any pretenses about offering detailed data analysis and marketing features offered by some of the larger-scale packages.

But Microsoft doesnt have to take the kitchen sinkware approach of major enterprise CRM vendors that offer multiple levels of functionality to justify the hefty prices for its products.

Microsoft is offering its CRM products for little more than what it used to demand for an office automation suite or a basic database server. This includes per user pricing of $395 CRM Sales Standard and Customer Service Standard; $795 for CRM Sales Professional and Customer Service Professional; $695 for CRM Suite Standard, $1,295 for CRM Suite Professional and $995 for the CRM Server.

These prices are low enough to entice smaller organizations to give CRM a try because there is less financial risk if the implementation runs into problems or fails to deliver promised productivity gains. That also means less risk that IT managers heads roll if things dont work out.

This is an important factor considering that its usually senior business executives and sales executives who drive the implementation of CRM applications. Its not normally an application that is high on the IT departments wish list.

After introducing its CRM package nearly a year ago, Microsoft claims to have more than 1,000 customers. This is miniscule compared to the customer bases of some of the larger CRM vendors. But it will grow over time.

In a report on the viability of Microsoft CRM Suite in the SMB market, AMR Research Inc. analyst Laura Preslan, estimates that it will be at least three years before the package will be strong enough to serve businesses generating about of $1 billion in revenue. Most of its current customers are producing $75 million in revenue or less, she notes.

There is no question that Microsoft is going to keep expanding the functionality of its CRM Suite so that it can serve progressively larger enterprises. There is also going to be progressively greater integration with a wider range of Microsoft business applications including Great Plains and Navison accounting and financial analysis applications.

Microsoft is also going to make it easy to enable customers to migrate data from competing CRM products. To start, these migration tools will link up with smaller scale products such as FrontRanges GoldMine, Best Software Inc.s SalesLogix and Siebels MidMarket Edition.

Eventually todays market leaders will find themselves drawn into a bruising competition with Microsoft to determine who is still standing tall in the market when the dust clears.