Microsoft Moves Into CRM Marketplace

Microsoft CRM, aimed at companies with fewer than 100 salespeople, is scheduled for release in the fourth quarter and will be available as a standalone product or integrated with Microsoft Great Plains solutions. Doug Burgum, Microsoft senior vice president and president of Great Plains, says the new product "fills a significant need" for a single, integrated CRM offering.

With the addition, Microsoft now has a wide range of software products that feature CRM capabilities, as well as a number of partners that sell CRM software. But Microsoft CRM may put the software giant at odds with its ISV partners.

Until now, partners including Siebel Systems, Onyx Software and Pivotal haven't shown concern because Microsoft CRM targets small businesses. Gartner analysts report it doesn't offer more advanced functions and "will likely not be the natural first choice of larger or more complex enterprises." However, Gartner also notes advantages, including lower prices than competing products, as well as ease of use and integration with Microsoft Office and other Microsoft products popular with SMBs.

Microsoft will undoubtedly step on some toes, especially in the emerging field of online CRM services. Currently, Microsoft partners with UpShot and SalesNet, which offer CRM functionality via the Web through an ASP-like subscription service. With the addition of .NET to Great Plains software, Microsoft will likely begin offering CRM Web services, which may compete with UpShot, SalesNet and others.

Christopher Fletcher, Aberdeen Group vice president, wrote that Microsoft, with its .NET Web services, has the potential to threaten most,if not all,CRM software vendors. "Microsoft is redefining the entire CRM and e-business market, and it's happening faster than most people realize," he says.

UpShot chairman Keith Raffel says his company is currently working closely with .NET technology to integrate its salesforce-automation service with other applications. But he says UpShot's highly customizable service, which includes no software, is decidedly different from Microsoft's .NET products. "What Microsoft does best is license software. I don't see them competing with us in the next 18 months," Raffel says.

Salesforce.com CEO Marc Benioff has a similar view: "I think Microsoft's trying to sell more software, like SQL Server and Exchange, along with its CRM and .NET. We don't think they're [competitors, because we're not a software vendor. Our model is for customers that don't want to buy software."