As I touched on in last week’s March CRM news round-up, the mid-range CRM market looks to be opening up a little. If you’d asked me last year I would have said that Microsoft and had a stranglehold on the market, but things seem to be changing. Sugar CRM clearly thinks so too announcing last week another round of investment totalling $33 million. Here are some of the areas that Microsoft and Salesforce may just be a little vulnerable:

An increasing enterprise focus – both organisations have been successful penetrating the larger, enterprise accounts, and both clearly see this as an attractive market place.  However, as companies like SAP have found, it’s difficult to be successful in both enterprise and the SME space, and they may find it difficult to maintain their appeal with lower end customers as they progress up the food chain.

Product focus – I’ve never been wholly convinced how seriously Microsoft takes the business solutions market given their vast range of other interests. Salesforce on the other hand has progressed largely because of their laser-focus on a single market. But, that seems to be changing. A raft of acquisitions, and a strategy that looks less and less centred around CRM, could weaken the strength of their product positioning and allow competitors to make gains.

Innovation – while there’s been a number of key technology jumps over the last fifteen years, particularly to web and cloud-based technologies, for which Salesforce has been a key innovator, progress on the functionality side has been rather more leaden. Microsoft in particular seems to have adopted a strategy of fast(ish) follower, and may well be vulnerable to more adventurous, agile competitors.

The impact of social media – Microsoft seems to have been in denial around the convergence of social media and CRM technology. Salesforce on the other hand has embraced it through products like Chatter, in an attempt to drive its influence far wider in the organisation. Whether Salesforce has the right strategy remains to be seen, but the reality is that the social dimension of CRM represents one of those technology shifts, like the move to the cloud, that may have the potential to change the established order of things.

The interface – it would be interesting to speculate what a CRM system would look like if it was designed by Apple. Very different from the current offerings I’d suspect. While there’s nothing inherently wrong (or right) with either interface, my best guess is this could be an interesting battleground for those that choose to innovate there. Look and feel is important, as Steve Jobs so conclusively proved, and, with a wider range of appliances like phones and tablets to access CRM from, there may just be scope for a user interface revolution.

Business focus – Infusionsoft added 3,000 customers in 2011 alone. Their success is built on consistently hammering home the business benefits of using their software. This is something of a rarity in the jargon strewn world of IT, and the major players in the CRM market are no exception, tending to talk up the technology rather than the operational impact. What Infusionsoft understands that perhaps other have missed is that a) people don’t buy technology for technologies sake, they buy the benefits it produces, and b) the benefits often aren’t obvious to them. There are opportunities for vendors who grasp this.

Price – Microsoft’s debut into the SaaS market last year was supported by an aggressive pricing strategy, but the recent announcement of pricing for their forthcoming mobile client suggests they may not be wholly committed to this approach. Salesforce faces the dilemma of pricing for both their deep-pocketed corporate clients, as well as more price-sensitive SME’s, and this may leave them exposed to competitors who can offer reasonably functionally-rich products at an aggressive price-point.

Despite these potential chinks in the armour, and Microsoft are hugely impressive, heavily resourced CRM vendors, with fully-featured product sets, large installed bases, and thousands of salespeople and partners. The market is unlikely to change overnight, but when you consider how the SaaS revolution changed the order of things in a few short years, it’s clear that major change in the space can happen relatively quickly. Even if and Microsoft are not to be unseated any time soon, there’s still a potentially profitable third place in the CRM mid-market to be fought for, and plenty of lucrative market segments available for those that can differentiate themselves. It feels like we have a very interesting few years ahead.

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One thought on “Seven reasons why and Microsoft could be vulnerable”

  1. hello richard – really appreciate your post – excellent thankyou.
    – I have been researching (deep-dive) into for the last 2 months. I use to implement CRM in the earlier days (Siebel, Salesforce)… so was sorta of a catchup.. lets see where they are.
    – After this 2 months, I am now looking at SugarCRM. Which I cannot believe as after 2 months of FT research… one rarely has that time luxury to deep dive.

    Why am I exploring SugarCRM and considering departing from SF?
    1- Ideas Exchange is poorly implemented. It lacks transparency e.g. no date of when item logged, no visibility when product managers were last logged on (or online) etc.., no dashboard, so you can see at a glance what is in there.. PLUS has poor data management (many duplicates, product managers closing items, so people complaining you have to revotet etc..)

    So this to me if they cannot role model best of class IdeasExchange and they are selling the app… that is way out of integrity for me. Directly against their principle of trust/openess/transparency.

    2- I feed my viewpoint of their IdeasExchange back to SF community. Needless to say it was not well received. In fact, I learnt SF has a MVP culture that “jumps on” people who are not drinking the SF cool-aid. mmm… that is not open. What they did not realise, I was a lover of SF. Love as a platform.

    3- I could not find easily what doesnt SF do well, where are the workarounds for that. I worked it out after 2 months (likely 50% of way). But the product set still misses some very very simple things. SF have long serving professionals (working for SF) who on the ideasExchange have logged items like “Back to the Core”.. meaning please get back to basics. There is many things SF does not do well. Annoyingly so. But this does not mean it is a poor product. It is just much easier on Customer, on CRM Consultant, for all, if upfront, do the workaround and get on with it….

    I am not a supporter of, keep this sorta information hidden (as often is the viewpoint on the basis “this is the value of the consultant”. I am a CRM consultant. Have been for 10+ years. Mainly mid-size. I have never been into the big fancy methodologies. I have always done agile, iterative, continual response to my clients. I advocate transparency.

    So I had hoped this gameplaying had left the CRM/ERP app industry. Is my view dainted or is this your experience too?

    Do you have any deep comparison link between SugarCRM and
    In my early days I played with Dynamics, been under the hood. Its not even a contender in my view. Reminds me of the days when I did CRM with Epicor. OMG… what was under the hood was scary. jigsawing pieces of purchased/acquired apps together so appears as a “suite”. is excellent from technology standpoint — when I say this, I am really referring to platform + its open API. The fact that it has really increased configurability, is so so helpful for customers. Shifting technical IP to an administrator. This is key. And will only improve.
    for example: — validation rules, workflow, approvals, GUI layouts (all configuration tools) and then relatively easily to extend with the more advanced toolset (VisualForce for User Interface, Apex for Triggers or some small code). It does alot more, but then you need a more hard-core developer than me.

    So I wondered is there a comparison of SF, SugarCRM, Microsoft if we must, on the
    – configurability (validation rules, workflow, approvals, page layouts, custom buttons, custom links, cross objects, unrelated objects etc.. )
    – data cleansing/master data management
    – mobile depth of featureset
    – chatter/social media featureset

    these 4 groups for me is where the “sweet spot” is.


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