Commentary: A dose of customer focus

By Joe Outlaw, Gartner Analyst

With most small and midsize businesses already firmly in its camp when they outfit or update their office networks, Microsoft should find that its foray into the field of customer relationship management will be happily embraced by smaller businesses for its cozy familiarity.

With its new CRM suite, Microsoft offers smaller businesses what they want--sales-force automation, customer service and marketing tools--but without the worries of handling a complex set of CRM tasks that they don't yet need to take on or aren't able to manage.

	See news story: Microsoft readies small-business push

Gartner believes that Microsoft's CRM software will appeal to smaller businesses because it will be affordable, easy to use and fully integrated with other Microsoft suites (such as Office and Exchange). It will be sold and supported by an experienced marketer (Microsoft's Great Plains unit) that boasts expertise in the CRM field and that already has a potent sales and distribution channel in place. Its basic functions are more than enough to meet the customer acquisition needs of most smaller businesses.

It will be available both as a hosted service and as a standalone offering, though most small to midsize businesses are looking for on-premises software tools to support their customer-focused activities.

However, Gartner believes that the first release of the Microsoft suite is not suited for small to midsize businesses that must manage multiple lines of business customer activities in varying ways on the same application. Nor does it enable tight call-center integration or permit significant customizing of applications.

In Gartner's opinion, CRM vendors with full-featured products--such as Onyx Software, Pivotal and Siebel Systems--don't have much to fear from Microsoft in this area. Their systems offer much richer capabilities, and they'll likely continue to enjoy warm relationships with Microsoft. The Great Plains unit, which markets a Siebel CRM product to midsize businesses, has proven to be an effective channel partner.

That relationship, too, should continue to be strong in the short term--at least through 2003--since the Microsoft suite is aimed at smaller and less sophisticated businesses. Instead, Microsoft and Great Plains are clearly targeting vendors such as Interact Commerce (with its SalesLogix package), FrontRange Solutions (GoldMine), Epicor Software (Clientele), Oncontact Software (Client Management Software) and Multiactive Software (Maximizer).

Many small to midsize businesses don't yet fully appreciate the multifunction nature of customer relationship management. They have trouble seeing its value as a useful way of putting more customer money into their pockets. But for smaller businesses (for example, those with less than 100 employees) that have at least basic IT expertise in-house, Microsoft CRM gives them technology that enables sales and customer service today, and puts them on a path for greater sophistication tomorrow.

(For a related commentary, on BT Group's CRM offering for smaller businesses, see gartner.com.)

Entire contents, Copyright © 2002 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.