Could Microsoft redefine the CRM market?

The combination of Microsoft Corp.’s .Net initiative, Web services and Passport authentication system will change the definition of CRM (customer relationship management) and give Microsoft and its partners a large foothold in the CRM market for small businesses, according to a report from research firm Aberdeen Group Inc.

Microsoft will offer information and services to businesses as small as 10 people and to small enterprises by packaging together their various applications and Web services, in much the same way that the company brought together disparate e-mail, word processing and presentation products to create Microsoft Office, according to the report’s author Christopher Fletcher, vice-president and managing director at Boston-based Aberdeen.

These businesses – which are currently not an area of focus for CRM companies – will be receptive to such offerings as they will be able to adopt them one at a time, rather than needing to take an entire CRM system as they do now, which can be resource-intensive and expensive, Fletcher wrote.

Web services might be used to generate sales leads, which would then be managed using desktop software, Fletcher said. In this situation, if a customer were looking for information about new cars, they might be required to sign up for Passport and divulge some information to the Web sites they visit in order to get that information, he said. After that information has been transmitted, that user could expect to receive some phone calls from local car dealerships who had received the lead from a Web service, he said.

Such a scenario would require a new way of thinking of CRM, one that moves beyond the current concept, he said.

“The day of the packaged software application is beginning to come to a close,” Fletcher said. In the place of packaged software will be a combination of packaged software and Web services, much like Microsoft will offer through its applications and .Net, he said.

The strategy employed in this area will likely blur the definitions of areas such as CRM and e-business, Fletcher wrote.

“Microsoft today is re-defining what CRM and e-business are all about, and it is happening faster than most of the companies in this current CRM market recognize,” he wrote in the report.

Companies in those markets will likely need to partner with either Microsoft or with a competing technology that provides similar capabilities, such as Sun Microsystems Inc.’s Java, Fletcher said.

Because there are competing technologies, large, established players already in the market and other companies, such as AOL Time Warner Inc., that are eyeing it, Microsoft’s domination of the market is far from a foregone conclusion, Fletcher said.

CRM users, however, can expect more and better services to be available to them as Microsoft makes a fuller push into the market, he said.