Microsoft enters CRM fray

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After years of watching its partners use the Windows infrastructure for their own CRM products, Microsoft Corp. has decided to enter the game itself.

Announced this month and scheduled to ship in the second half of the year, Microsoft CRM is designed for small and midsize businesses. An offshoot of software developed by Great Plains Software, which Microsoft acquired last year, the package is designed to run on-premises or as a hosted application.

Notably, the tool will take advantage of Microsoft’s nascent .NET technology, a Web services platform that enables communication between various applications. In the case of CRM, .NET might coordinate information about customers stored separately in e-mail, contact management and sales force automation software.

But experts caution that .NET can’t completely solve some thorny problems. "It can unite Microsoft’s offerings, but what about companies that aren’t all-Microsoft?" said Mitch Kramer, an analyst with Patricia Seybold Group in Boston.

Those that use Netscape Mail or Lotus Notes, for example, would still have to find a way to extract customer data from those applications.

Microsoft already offers small businesses a service on its bCentral Web site for tracking sales leads, but that service requires all customer information to be stored on the Web site. By contrast, Microsoft CRM will take advantage of information already stored in a company’s own systems.

Another distinction is that bCentral is designed for companies with 25 or fewer employees, whereas Microsoft CRM is for companies with 25 to 100 employees, said Holly Holt, Microsoft product manager. Most companies of that size use a hodgepodge of homegrown applications, including spreadsheets, she said.

Application hooks

Internal or third-party developers could use .NET tools to "customize and extend" Microsoft CRM for their unique environments, Holt said.

But Microsoft already offers a higher-end sales and marketing automation module that plugs into a large CRM package from Siebel Systems, and Holt stressed it does not plan to offer its own full CRM package for large businesses. However, she indicated that packages for sales-force automation and customer service could be on the way.

Seybold Group’s Kramer believes Microsoft could have a significant impact on the entire CRM category. "Whenever Microsoft enters a space, they change it," he said. "Their pricing structure changes the market substantially" because others have to compete with a less expensive alternative.

Pricing for Microsoft CRM has not yet been announced.

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