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Microsoft is in the CRM game. What happens now?
Posted Apr 1, 2002
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Microsoft will take on the Customer Relationship Management (CRM) market by the end of the year, possibly as early as October. The move is Microsoft's latest aim at the business application market for small companies, a market it will dominate, eventually. For now, the product has limited functionality, doing little more than contact management in sales and case management with a knowledge base in service. However, the development team has nailed usability in the application itself-critical to a successful CRM deployment-but also in the deep integration to MS Outlook. With the base product and development environment in place, Microsoft will now add product catalog, quotes, pricing, marketing encyclopedia, pipeline management, forecasting, basic e-mail campaigns, contracts, scripting, and CTI (via partners). Microsoft will also offer a customer portal, which is meant to provide access to the knowledge base, Frequently Asked Questions (FAQ), and visibility into open cases. It can also act as a storefront and give users order visibility through integration with Great Plains' product family. Microsoft remains committed to small and midsize businesses, going after deals of between 10 and 100 users. Early pricing starts at about $500, scaling up to $900 to $1,000 per user, which matches or beats competitors. The goal will be to offer a bundle of software, services, and hardware for around $30K. Microsoft will succeed if these small deals aren't pilots for deployments that need to become larger over time. It won't be able to scale until the product is more robust. Competitively, the launch will have no effect at the enterprise level. But mid-market CRM vendors, such as Onyx, Pivotal, and Interact, will feel some pressure in smaller deals now, and will be hurt over time as new functionality and maturity allow Microsoft to slowly creep up into the 100-user opportunities, likely by late 2003. While the list of development requirements is ambitious for the October timeframe, many companies will still hold off on making a CRM investment until they can take a look at it, which will affect leaders in the low-end, including Frontrange (makers of Goldmine), some of the existing MS Outlook-based providers like OnContact and WorldTrak, and hosted providers Salesforce.com or UpShot.
The Siebel/Great Plains partnership, however, will be strained. While it has been successful, producing nearly 1,000 joint customers in the last two years, the reality is that both products will be competing for the same channel partners. Over time, the Microsoft product will prevail because it will offer better Total Cost of Ownership (TCO) based on integration to the Microsoft technology stack and the rest of the Great Plains product portfolio.
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