Microsoft CRM moves under the microscope
Published: 17 Apr 2002 12:01 BST
Microsoft's plans to ship by year's end a new software package called Microsoft CRM, built on technology from its Great Plains unit, wasn't entirely unexpected. Speculation had run high that it would make an entry into the business software market since it acquired Great Plains, a maker of accounting software for small and midsize businesses, in 2000.
Microsoft says the CRM package is tailored for companies with between 25 and several hundred employees. Company executives insist they are focusing on an underserved market and do not intend to compete with partners such as Onyx and Pivotal.
Microsoft has also said the new CRM technology won't compete with an agreement inherited from the Great Plains purchase to resell technology from Siebel. That pact was intended to serve high-end customers with thousands of employees.
But the CRM market, which Microsoft once said it would leave to its partner software companies, is different from most niches the software giant has attempted to tackle. Competitors in the CRM market generally approach customers with a "vertical view" of the potential sale. In other words, they design applications for companies in a specific segment of a market. Siebel, for example, targets the financial services industry with a sales force automation program tailored specifically for that client.
In addition, the CRM market is highly fragmented, depending on the market a company is addressing. Siebel has the lead among large CRM customers, for example, but does not have the same hold in the lower echelons of the market. Most competitors slice the market into three distinct opportunities: large, global Fortune 2000 corporations; midenterprise companies with revenues of approximately $100 million to $3 billion; and small businesses with up to $100 million in sales.
"What makes a company a leader in one of those segments almost completely disqualifies it from leading in another market segment," said Divesh Sisodraker, chief financial officer at Vancouver, B.C.-based Pivotal. "Very clearly, there's been a segmentation. Microsoft will be very strong in the small-business market."
In this climate, few clear leaders have emerged, even though competition is stiff, as evidenced by the recent announcement of a hosted software upgrade from Oracle.
That's what Microsoft is counting on. In researching the opportunity, Microsoft executives said they found a niche in small businesses of 25 to several hundred employees that was ready for a sophisticated yet easy-to-use software program such as a CRM package that includes functions for marketing and sales.
"We haven't designed this for the enterprise, and it won't suit that market," said David Thatcher, general manager for Microsoft CRM.
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