Mention customer relationship management (CRM) as a business application category, and the vendors that come to mind are Siebel Systems, Genesys, and Firstwave—not Microsoft. The Redmond-based maker of software for PCs and servers is making business software vendors nervous with its first entry into the CRM market, despite the company's claims that it's concentrating only on "middle-market" customers (which David Thacher, Microsoft’s general manager for CRM and business strategy, defines rather arbitrarily as from 15 to 150 seats).

Microsoft CRM is the first Microsoft business product the company has deployed using the new Microsoft .NET platform. Implemented as one or more servers, the product provides client access through Web pages or a plugin to Microsoft Outlook on the user’s desktop and is designed to be easily configured by part-time IT staff. Microsoft CRM will be available in a sales package, service package, or as a suite that includes both packages and in standard and professional versions. The professional version includes programmable workflow—so, for example, entering a sales prospect will automatically trigger various documents and alerts.

In front of a large audience at Microsoft’s Silicon Valley conference center earlier this year, Thacher demonstrated Microsoft CRM's complete access to sales, service, and report functionality both from a Web browser and from Outlook. He explained that, when used with Outlook, the product loads and synchronizes with the server a database and "a bunch of forms"—users can customize how much data is synchronized. A Web-based management view provides extensive customization—you can add custom fields to the built-in forms and modify form layout at will. The product supports a variety of back-end systems, including Microsoft Great Plains Division’s Dynamics and Solomon solutions and solutions from companies such as Navision (which Microsoft recently acquired).

Asked about scalability beyond the middle market, Thacher said, "It’s a loose target, and there’s no constraint on performance—people will grow out of it when their organization gets complex enough to require extreme customization." He went on to add that his group is running Microsoft CRM, "but for our enterprise sales force, we have a full Siebel implementation."

Microsoft will sell its CRM product through only the value added reseller (VAR) channel—indeed, Thacher invited Terry Petrzelka, CEO of Tectura (a Great Plains VAR) to join him when he announced the product. Petrzelka said that Microsoft CRM "will let our customers improve return on investment on systems we already sold them. It’s managed and customized through simple interfaces and seamlessly integrated with Outlook. It offers us a tremendous value-add."

According to Microsoft, pricing for CRM will range from approximately $395 per seat (for either sales or service in the standard version) to about $1295 per seat (for a professional version), plus about $1000 for each server. Thacher expects the product to ship in fourth quarter 2002, "and there are 31 days in December on my calendar," he said.