Microsofts Real Target

Microsoft has called the sweet spot for its CRM suite the 'corporate account' market.

Why is it that when Microsoft says something, no one quite believes it? Even before the company took the wraps off its CRM offering at the start of this year, Microsoft adamantly maintained that it was aiming the product at small and midsize businesses and not at corporate enterprises.

The more Microsoft watchers asserted that the companys ultimate goal is to target the enterprise with Microsoft CRM, the more Microsoft denied it. Microsoft repeatedly claimed it had no intentions of fielding a superexpensive, difficult-to-deploy, tough-to-manage customer relationship package, akin to those from Siebel and SAP. In fact, company executives stressed, Microsoft wanted to partner with these high-end players, not fight them. But recently, it seems Redmond—and its resellers that are charged with selling the CRM product—are begrudgingly admitting that Microsoft CRM is more likely to appeal to larger companies than smaller ones.

Publicly, Microsoft continues to deny it intends to extend its CRM reach beyond SMBs. But privately, Microsoft is, indeed, acknowledging that its new offering is more suited to big corporate customers than to smaller shops. Microsoft has acknowledged this tacitly by referring recently to the sweet spot for its CRM suite as the "corporate account" market. Corporate accounts, in Microsoft parlance, are companies smaller than the Fortune 1000—in other words, with sales of $800 million or less. Microsoft says any customer in this category is not an "enterprise customer." But theres no arguing this constitutes, at the very least, the upper end of the midmarket.

Microsoft also has noted, lately, that of the "hundreds" of customers who have purchased its Microsoft CRM 1.0 offering since the start of the year, the vast majority has bought the more expensive and more feature-complete Professional SKU than the lower-end Standard one. They are the kind of businesses that require the workflow integration thats built into Professional and the ability to integrate with other Microsoft products, such as BizTalk Server. These are not mom-and-pop shops but are bigger businesses with complex needs.

With Microsoft CRM, when you add in the supporting servers—such as Windows 2000 Server or later, SQL Server, Exchange Server, BizTalk Server—needed to make Microsoft CRM tick, youve got yourself an expensive proposition, one thats too expensive for many typical SMBs, say some resellers.

Microsoft CRM is really an emerging enterprise product in SMB clothing. Microsoft should come clean. Then it could start soliciting more data from the customers who are its real target on how it should make the product more enterprise-worthy.

Mary Jo Foley is the editor of Microsoft Watch, a Ziff Davis newsletter about Microsofts people, products and strategies. See her Web log at