Catching the Wave of Microsoft CRM

Microsofts CRM debut is viewed with a mixture of skepticism and concern by rivals. Instead of fighting it, CRM vendors should capitalize on the market opportunities that Microsofts presence and marketing dollars will create.

More than a year in the making, Microsoft is executing on what can be considered Phase 2 of its e-business application strategy by entering the CRM market. The wheels were set in motion at the end of 2000 when Microsoft first announced its intentions to acquire Great Plains, giving Microsoft the expertise in mid-market ERP applications plus greater exposure to CRM and SCM through existing Great Plains initiatives and partners. Therefore, it wasnt unexpected when Microsoft announced its intentions in early 2002 to enter the CRM market with its own suite to address small and mid-sized businesses. Yet while the media are feeding on the David-and-Goliath storyline, an overlooked aspect is that Microsofts entrance into CRM could in fact be a catalyst to stimulate greater CRM sales opportunities among small and mid-sized businesses (SMBs).

With history as a guide, there are some likely outcomes from Microsofts CRM efforts that may help to break down the barriers that CRM vendors have faced so far in selling CRM to the SMB market. First, Microsoft products are generally perceived to be easy to use, easy to deploy, and easy to administer, which strikes at the heart of many complaints against CRM. Microsofts presence in the CRM market could change the minds of SMB buyers that may have previously considered CRM too complex and expensive for their organizations. Second, as a newcomer, Microsoft has its work cut out to build awareness for Microsoft CRM and to convince its SMB target market that CRM is a necessary technology investment. As a result, other CRM vendors with smaller marketing and sales budgets stand to gain from the resources that Microsoft will pour into its own CRM strategy for demand creation and lead generation.

This is not to say that the competitors in the CRM market, particularly mid-tier competitors, dont have anything to fear from Microsofts push into the market. But Microsofts CRM efforts may also open more alliance opportunities for specialists in areas such as marketing automation and/or contact center solution providers, which are two areas where Microsoft is likely to expand in future iterations of Microsoft CRM. Struggling niche CRM companies may also find that they could become acquisition targets for Microsoft, since the company needs to move quickly with its CRM strategy, given its lateness to an established market. Competitors wont be taken by surprise, however, as Microsoft isnt being particularly secretive so that prospective customers, partners, and competitors alike know what to expect as the companys CRM strategy unfolds.

Microsoft could have the same impact on mid-market CRM opportunities as Siebel had on the enterprise CRM market. While there are a lot of contenders trying to throw Siebel off its throne, Siebel can be credited with the creation of the CRM market with the marketing and awareness that the company did to convince large organizations that they needed a better solution to run their sales and service departments and manage their customer relationships. Microsoft has the brand clout, market presence, and financial resources to have a similar impact among SMBs to convince them that CRM isnt something only for the largest of companies. Rather than ignoring Microsofts entrance in the market, CRM vendors should try to catch on with Microsofts demand creation efforts among SMBs, which in the end may be self-serving for the entire CRM market.