CRM Players Spin Microsoft's Plan As Best They Can

Microsoft

While hardly a surprise, Microsoft CRM signals the software giant's entrance into yet another application area where it is bound to compete with more of its own ISV partners. Those companies include Onyx, Pivotal Software and enterprise CRM kingpin Siebel Systems (related story ).

"My inbox has been quite active with e-mail [from vendors telling me how Microsoft's move 'will not hurt my company, but boy these other guys better watch out!'" said one software analyst.

Microsoft CRM, due in the fourth quarter, is geared at the lower end of the mid-size-business market. Companies with 25 employees or more and without dedicated IT staff are targeted. For smaller companies, Microsoft offers a line of bCentral-branded services. At the higher end of the SMB market, Microsoft offers the Great Plains Siebel Front Office package. It takes aim at companies with more employees and more technology resources that need more customization, said David Thacher, general manager of CRM for Microsoft.

Microsoft's new CRM offering is also out of its Great Plains unit. Microsoft bought Great Plains Software in 2000.

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Microsoft said MS CRM will include server software, sales-force automation, customer service and basic marketing functionality. Users can either "embed" the CRM capabilities into their Outlook clients or use a zero-footprint Web client. Offline capabilities, which would let disconnected users offer on-the-spot quotes, for example, require the Outlook integration.

Microsoft was careful to tread lightly around its current CRM partners. It works often with both Onyx and Pivotal in many accounts and is also closely aligned with Siebel, which is carefully watching for any signs that Microsoft will attack the enterprise CRM market it now dominates.

On a FAQ page on the Great Plains Web site, a question asks if Microsoft plans to attack enterprise CRM. The answer: "No, we do not have plans to target the enterprise in the CRM space. However, through our strategic alliance with Siebel Systems Inc., we offer a CRM solution to medium enterprise customers."

At least some vendors appear to be taking Microsoft at its word.

"The companies impacted ... are the CRM vendors focused on the low end of the market such as Interact, Goldmine and Epicor," said Bo Manning, CEO of Pivotal. His company, he stressed, is after "midenterprise companies in the revenue range of $100 million to $3 billion. The very top of Microsoft's target market is less than half the size of Pivotal's lowest target."

Interact Commerce, the maker of SalesLogix, is likewise putting a happy face on the news. "The SMB space is a target rich market with very low penetration. We feel Microsoft's move into the market validates the strategy [of delivering integrated front-office/back-office applications to small and midsize business," said Tim Fargo, general manager of Interact's SalesLogix division.

And while MS CRM is being painted by Microsoft as an on-premises offering, not geared for ASP delivery, ASP CRM forces are watching it closely. In a memo to Salesforce.com employees, company President Marc Benioff characterized MS CRM's interface as "easy to use, even cute."

"It offers graphics and animation that has a consumer-esque look and feel. It is approachable. If Hasbro had built a CRM product, it would look like Microsoft CRM," Benioff wrote.

But, he stressed, Microsoft is offering software, where Salesforce.com, which has become a staunch supporter of Microsoft's .Net initiative, is a service.

And again, Benioff painted MS CRM as a problem, for other people. "Microsoft Great Plains will cause 'Great Pains' to the software CRM players who built their products in Microsoft's path," he said, citing Onyx, Pivotal, Purple "and yes, even Siebel."

Benioff said those companies will follow in the wake of Borland, Ashton-Tate, Lotus and WordPerfect, all former software powers that have either fallen on relatively hard times or been acquired.

Microsoft and Great Plains solution providers, which typically concentrate on smaller to midsize companies, are bullish. They see the offering as a way to penetrate more small companies with less integration work. The time to market will be much faster than with Siebel, said Orgad Gratch, CEO of Toronto-based TGO Consulting, a Great Plains reseller.

Analysts and solution providers said Microsoft is entering a fertile area. Many smaller companies have little or no CRM as of yet. "Here we have the market leader in productivity applications trying to move that commoditization upstream a bit," said Mary Wardley, CRM analyst for IDC.

Jay Fruin, president of Leveraged Technology, a New York-based solution provider, agreed that CRM has yet to make its presence, or value, felt in smaller companies. "CRM has only touched the large enterprises so far, and how much of the enterprise is using it is still really in question. And, CRM hasn't really touched midmarket companies yet. Microsoft perceives a real opportunity in that," he said.