Microsoft CRM Product Has a Low-End Look, Say Analysts

When Microsoft last February announced its plans to enter the CRM market, the initial thinking was that the move could spell trouble down the road for top-tier vendors such as San Mateo, Calif.-based Siebel Systems Inc. But analysts, rivals and Microsoft itself say that for the time being, Microsoft CRM will appeal mainly to low-end users.

That part of the CRM market is highly fragmented and largely untapped by software vendors, according to Access Markets International Partners Inc., a New York-based IT market research and consulting firm. The company said that only about 10 per cent of small and midsize businesses in the U.S. are using sales force automation or CRM applications, many of which are homegrown systems.

One big potential advantage for Microsoft is the seamless integration that it’s promising between the CRM applications and Office. Microsoft CRM “almost looks like Outlook,” said David Root, chief financial officer and head of IT at Eagle’s Flight Creative Training Excellence Inc., a corporate training company in Guelph, Ontario.

Eagle’s Flight is a longtime user of the Great Plains business applications Microsoft acquired last year. For CRM, Eagle’s Flight has been using a version of Siebel’s software that Great Plains sold as part of a deal that ended in August.

Although Microsoft still supports the Siebel software, Root said he plans to migrate to Microsoft CRM, probably toward the end of next year.

There are a few features in the Siebel applications that Root said he would like to see added to Microsoft CRM, including integration links to other software. Once those are in place and any early kinks are worked out, Root said he expects to switch to Microsoft CRM.

Chad Pomeroy, chief technology officer at Alexandria, Va.-based Lumenos Inc., in August decided to buy CRM software developed by San Francisco-based Inc. Lumenos, which offers health care programs to employers, needed basic CRM functions, and Pomeroy said the company is happy with’s technology. But if Microsoft CRM had been available, he added, he likely would have evaluated it.

Microsoft’s upcoming entry is likely to help rival CRM vendors more than it hurts them, according to Jim Shepherd, an analyst at Boston-based AMR Research Inc. “Some niche vendors could find themselves displaced,” Shepard said. “But for the most part, this is probably good news.”

— Stacy Cowley, IDG News Service