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Microsoft CRM conquers the enterprise

With deals that number over 500 seats Microsoft CRM is making its move into the enterprise.

Originally positioned as a product geared towards the small and midsized business (SMB) market, Microsoft Dynamics CRM has also been gaining traction with enterprise customers. According to executives announcing a slew of customer wins this week, the release of Microsoft Dynamics CRM 3.0 has opened new doors of opportunity.

"For Microsoft CRM to focus on the enterprise is a relatively new development," said Kevin Faulkner, product marketing director for Microsoft Dynamics CRM. "Our push into the enterprise is a newer effort for us with the advent of CRM 3.0."

The enterprise has become a more attractive market for Microsoft CRM for a number of reasons, according to Faulkner, not the least of which is the merger activity. Oracle's acquisition of Siebel, as well as PeopleSoft and smaller deals like SSA Global's purchase of Epiphany, has left some users concerned about vendor viability. That's not a problem for a stalwart company like Microsoft, Faulkner said. Additionally, Microsoft is positioned to take advantage of backlash against cumbersome, difficult deployments that have often characterized the bigger players in the market.

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"Similar to the demand for SaaS [Software as a Service], there's a downside to the Siebels and Oracles in that they're too complex," said Liz Herbert, analyst with Cambridge, Mass.-based Forrester Research Inc. "The traction I'm seeing with Microsoft is like [that of] Salesforce.com." And it's not just the simplicity and ease of use of the tool. "People's familiarity with Microsoft's applications is a huge advantage," Herbert said. "[Dynamics CRM] reacts and acts very much like Outlook. People I've spoken with love that. Sales folks don't have to learn a new tool."

However, like many of San Francisco-based Salesforce.com's enterprise deployments, Microsoft's so far seem to be limited to divisions of larger organizations, Herbert said.

Microsoft considers an enterprise customer one with 500 licenses or more, according to Faulkner. And it does boast a number of them. For example, it has inked a deal with Kansas City-based H&R Block for 1,500 seats, and the company has a five-year plan to deploy 6,000 seats. AGFirst Farm Credit Bank is deploying 1,500 seats, and Maccabi Healthcare Services, an Israeli health maintenance company, now has 1,200 seats.

One "enterprise" customer that fits in the 500-seat range is Quiznos, the Denver-based sandwich chain, which signed on for 550 licenses in February 2005 with Microsoft CRM 1.2.

"The main reason [we went with Microsoft CRM] is most of the applications in-house are Microsoft products. We were able to take advantage of our infrastructure team," said Kristie Reid, IT project manager with Quiznos. "[Version] 1.2 didn't have all the functionality we were looking for, but it was flexible enough that we could build onto it."

Quiznos uses the system in part to assist salespeople in the field who are working with potential franchisees to submit financial records. Additionally, the company uses Microsoft CRM to track orders of materials such as signs, wallpaper and soda machines for its nearly 4,000 restaurants. Reid said the company has highly customized the application to work with its own processes but when it upgrades to Microsoft Dynamics CRM 3.0, the new workflow engine should alleviate some of that.

Microsoft's .NET developer environment is another advantage for the company as it sells into the enterprise market. It's a tool that developers are familiar with -- the same way sales people are familiar with Outlook, Herbert said.

"We've really got a simple way to customize the projects," Faulkner said. "Coupled with that is low total cost of ownership, both with [new] accounts but also at the divisional level for expansion within enterprises who may have a central CRM system."

Microsoft "doesn't like to talk numbers" when it comes to the distribution of its customer base between small businesses, the midmarket and enterprise businesses, Faulkner said, but it does break down roughly in line with the overall CRM market. He estimates 40% of Microsoft's CRM customers are enterprise by the company's definition.

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