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Microsoft jumps into CRM market

The software behemoth shows off its first software for managing customer relationships, another step in the company's expansion into the business applications market.

MOUNTAIN VIEW, Calif.--Microsoft tossed its hat into the growing customer relationship management ring when it previewed its first CRM product here Thursday.

Due for release by the year's end, Microsoft Customer Relationship Management has two modules: one for salespeople and the other for customer service representatives.

The software will exchange data with Microsoft's desktop applications including its Outlook e-mail package and Internet Explorer browser, as well as with its back-office applications, such as accounting and financial packages.

Microsoft CRM will be priced from $395 per user to $1,295 per user, depending on the features people pick, the company said. It will run on a Windows 2000 server.

David Thacher, general manager for Microsoft CRM, demonstrated how the tool tracks leads, accounts and orders--features he said can improve sales force productivity and customer satisfaction. Microsoft CRM will also help service reps track and resolve customer service cases, he said.

The new software is tailored for companies with between 50 to 500 employees. Microsoft said it's looking to compete with FrontRange Solutions' GoldMine, Interact Commerce's Sales Logix, and products from and UpShot.

An UpShot representative said his company's own model is more economical because it includes maintenance, hardware and implementation costs, whereas Microsoft does not.

Microsoft executives insist they do not intend to compete with software partners such as Onyx Software, Pivotal and Siebel Systems. The company's Great Plains division has a reseller agreement with Siebel.

But Microsoft's forthcoming entry into the CRM market has many people talking. An aggressive competitor, Microsoft can quickly move from friend to foe of its technology partners, analysts have noted.

Branching out toward CRM is just one part of Microsoft's expansion into the business applications market, now dominated by SAP, Oracle, PeopleSoft and Siebel. It started with Microsoft's acquisition of accounting applications company Great Plains last year. In May, the company agreed to acquire a Danish software company called Navision to increase its reach in that market in Europe.

With the desktop application market starting to mature, observers say Microsoft is looking for new areas of growth. CRM has become the must-have enterprise software for many large companies in the past few years. The software is intended to streamline customer service, give sales staff the customer information they need to close deals faster, simplify marketing and sales efforts, and help companies find new customers and generate more revenue from existing customers.

While CRM has been a hot growth area in the business software market, sales of the leading software providers, including Siebel and Epiphany, have declined this year amid a depressed market for business applications. However, technology research firms are optimistic that the multibillion-dollar market will eventually regain its strength and predict it will double or triple over the next few years.

Microsoft said its partners will sell and install Microsoft CRM and provide customer service. Microsoft announced in February its plans to ship the CRM package, built on technology from the software maker's Great Plains unit.