Microsoft officially enters the CRM fray

Depending on who you ask, Redmond, Wash.-based Microsoft Corp.’s entry into the customer relationship software (CRM) market will cause either a splash or a ripple.

Geared specifically toward the small- to medium-sized business market – organizations with fewer than 500 employees – the company’s Business Solutions unit officially unveiled Microsoft Business Solutions Customer Relationship Management in February. The application is built on Microsoft’s .Net infrastructure.

During the recent launch in Toronto, Microsoft Canada Co. president Frank Clegg talked of selling the offering as a business process rather than a technology.

He said CRM in recent years has become vital, but enterprises have had difficulties defining it and implementing successful strategies. Microsoft’s first-generation offering – and the first business product to result from its recent acquisition of ERP vendors Great Plains in 2001 and Navision last year – targets salesforce automation, including forecasting and lead and contact management.

Available now, the offering requires Windows 2000, SQL Server, Internet Explorer 5.5 and Active Directory. Pricing starts at $595 per user. An additional licence is required for the CRM server. Microsoft said the solution can be accessed from a browser or using Microsoft Outlook. It can also be hosted by certified resellers or offered as an on-site tool.

Laura Pollard, president of the Toronto-based Customer Relationship Management Association of Canada, echoed Clegg’s statement, trotting out data from its joint study with Microsoft showing failed CRM implementations in Canada are around 60 per cent. Pollard said this is due to a lack of enterprise-level planning and the failure to shift to “customer-facing” business processes.

Warren Spitz, CEO of Toronto-based specialty lumber product distributor UCS Forest Group, is an early user of Microsoft CRM. Initially a Great Plains ERP customer, the company needed an integrated CRM tool for its inventory database and to improve interactions with both vendors and customers.

“CRM is a logical extension of the database that we have as a tool to manage that information and make it readily accessible,” Spitz said.

In terms of measuring ROI, Spitz noted that UCS Forest Group had failed at its CRM rollouts in the past.

“This is our third attempt at CRM,” Spitz said, adding that the issues at hand were integration, scalability, usability and compatibility with existing infrastructure and data.

“We’ve tackled the puzzle by layering the MS CRM on top of our Great Plains system, which means that all of the information is seamless and accessible – now the issue is simply using it,” Spitz said.

According to Gartner Inc., Microsoft is entering a stagnant CRM software market. Recent figures from the Stamford, Conn., research firm show the worldwide CRM sales dipped from US$3.7 billion to US$3 billion in 2002 and will remain flat in 2003.

Time will tell, according to Jacob Abramowicz, senior research analyst at Toronto-based E-Search Canada, if Microsoft has any impact on a flagging CRM market.

It’s a simple solution that’s entering a weak market, Abramowicz noted. “It might spark interest, but then again, it’s a matter of looking but not buying. I hope they don’t have their expectations too high in the short term – it’s just not something that’s going to immediately make a splash.”

In Microsoft’s favour is the fact it is targeting the Canadian mid-market, a sector which has had no dominant vendor, he added.

High-end CRM vendors including SAP, Oracle, Siebel and PeopleSoft won’t feel any pressure from Microsoft’s strategy, at least in the short term.

“They’re going for a market where 90 per cent are already running Windows and already integrated with Outlook and Excel,” Abramowicz said.