There were two generally held assumptions when Microsoft entered the CRM market: the features in its version one...
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product might disappoint some and it would steal market share from the established small and midmarket vendors.
Neither of those scenarios has played out quite like expected.
According to research from Stamford, Conn.-based Gartner Inc., Microsoft CRM (MSCRM) has exceeded early adopters' performance expectations. In a report issued last month, Gartner CRM research director Wendy Close found that users ranked MSCRM best in price for the value received.
There is a caveat, however.
"[Small and midsized businesses] had very low expectations to begin with," Close said. "No one expects version one be any good, especially from Microsoft."
Factoring into the tepid expectations were some product release delays. Earlier this month, Redmond announced its 1.2 feature pack. Available in August, the pack includes closer integration with Microsoft Office 2003 applications, mobile functionality on Pocket PC 2003 devices and CRM enhancements that include updates to the Sales for Outlook tool. However, the upcoming release of 1.2 means that Microsoft has pushed back version 2.0 from the end of this year to the second quarter of 2005.
Ironically, many customers are waiting for the added integration with Microsoft's own e-mail application that will come in the feature pack. Several other CRM providers have recently touted their integration with Outlook, but quickly integrating with other Microsoft applications is where the company sets itself apart from other CRM vendors, Close said.
MCPc Inc., a Cleveland-based computer products and consulting company, was an early MSCRM adopter. Its experiences fall in line with what Close found in her research.
"In general the 1.0 [version] was a shaky start," said Dale Phillips, MCPc's IT director. "With 1.2, I believe they've gotten much better. We would have hoped it would have been a little smoother, but everybody's a little realistic in the software world today."
MCPc started small with its implementation and will roll out 1.2 to about 70 sales reps.
Like MCPc has done in delaying its widespread roll out, many SMBs are interested in Microsoft CRM but are waiting for more mature releases, Close said. She expects the big wave of adoption to come with version 3.0. Thus far, the SMB market is still relatively unpenetrated. Microsoft has about 1,300 customers, with an average of 24 users per deployment. IT brought in about $20 million in license revenue from MSCRM last year, Close said.
"They're not stealing market share; it's brand new [customers]," Close said.
In the future, Microsoft's customers could come at the expense of hosted CRM leader Salesforce.com. At a recent conference for midsized businesses, much of the buzz was about Salesforce.com. But when it came to discussions about the future, attendees' questions quickly turned to Microsoft, Close said. Some companies are "getting their feet wet" with CRM using Salesforce.com, but are planning to buy licenses and move to Microsoft long term because they already run so many Microsoft applications, she added.
Going with Microsoft was pretty much a given for MCPc. It already had a myriad of different content management applications and never considered building an in-house CRM application.
"It really was Microsoft all the way," Phillips said. "We were focusing on a Microsoft-centric world anyway. I think everybody's confident that Microsoft's going to make this thing work. We just need to be patient."
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