Until now, CRM has mainly been adopted by larger businesses because of the complexity of implementation and the cost, which can run to millions of pounds.
Microsoft last week released the latest version of its CRM software and Siebel, the market leader for CRM, will this week release the UK version of its product, Ondemand CRM, which was launched in the US in October this year.
Microsoft's version 1.2 is the European version of its CRM package, which until now has only been available in the US. It will be on sale at the start of 2004.
This week Siebel will bring its Ondemand CRM product to the UK. Priced from £50 per month per user, it is offered through BT as an online hosted service accessed via a web browser.
Jim Davidson, research analyst at Gartner, said Siebel's Ondemand CRM was significantly cheaper than the full Siebel product, which can cost hundreds of thousands of pounds for large corporate users. He added that it provided "good enough functionality" for small and medium-sized business users.
Davidson's one caveat related to firms that wanted to expand their use of Siebel Ondemand. "A small or medium-sized business may start out with 50 to 70 seats, but when they expand the number of seats to hundreds of users, the costs per seat of Ondemand CRM can be very expensive."
Equally, a large business could start with a small roll-out of Ondemand CRM, but Davidson said that expanding CRM implementations within a business required expensive integration work to link CRM software with enterprise resource planning products and other back-office systems.
Siebel integration relies on the company's Universal Application Network technology. In Davidson's experience, integrating systems with UAN can cost more than £200,000.
Siebel is not the only company targeting users who want a cheap CRM system. Salesforce.com has carved a niche by providing small and medium-sized businesses with CRM software available through a software subscription service. But although Salesforce.com has generally targeted smaller user installations, it is now expanding to sites with as many as 1,000 users, according to David Bradshaw, principal analyst at Ovum. He said Salesforce.com had fewer features than Siebel products, but was significantly cheaper.
Siebel's strength over Salesforce.com, according to Bradshaw, was the sophistication of the marketing and campaign module within the version of the product implemented at large businesses. Salesforce.com contended that its products did offer a viable alternative to the full Siebel software across all functions, including market and campaign management.
The new entrant on the market is Microsoft, which has put the finishing touches to its European release of Microsoft CRM. Key features include an interface to allow users to manage customers within Outlook, and support for the .net programming architecture, which offers a way to customise CRM implementations.
Nigel Montgomery, director of European research at analyst company AMR, described Microsoft CRM as a core CRM product. He said that third-party developers such as Netherlands-based ERP manufacturer Scala were customising the Microsoft product in their own suites.
Montgomery said the 90 days interest-free credit Microsoft offers with its CRM would make it very attractive to small and medium-sized businesses.