The deal calls for Microsoft to integrate Crystal Decisions tools directly into Microsoft CRM, as well as resell the technology. Microsoft CRM, which will become the first business solution from Microsoft built on .Net, is initially aimed at the low-end market. The product will be accessible through Microsoft Outlook and the Web and have hooks into Microsoft Office and Microsoft Great Plains. A key part of CRM is its ability to analyze data and spew coherent reports concerning trends in sales, marketing and customer service. Hence today's alliance with Crystal Decisions.

And Crystal Decisions has made great strides in this space, industry watchers say. The privately-held company boasts most recent quarter revenues of $56.2 million, a 28 percent increase over the same quarter last year, and a 9 percent increase over the previous quarter. So far, Crystal Decisions has sold 11 million software licenses.

Crystal Decisions' flagship Crystal Enterprise enables businesses to access and analyze data from numerous applications, create 125 out-of-the-box reports, and share them with employees, customers and partners. More importantly, the company's product is integrated in offerings from giant software vendors, including PeopleSoft, SAP, J.D. Edwards, and soon Microsoft. "Partnering is important to the company," says Mike Brooks, director of alliances and corporate development, declining to discuss the amount of sales that flow through direct and indirect channels. Financial terms of the Microsoft deal weren't disclosed.

Crystal Decisions isn't a stranger to Microsoft; in fact, its technology is the de facto reporting tool for Microsoft's Visual Studio .Net. Interestingly, Microsoft Great Plains has some reporting capabilities for financial data that could have been applied to CRM, says Kelly Spang, analyst at market researcher Current Analysis. "But Crystal is a well established player, has legitimate technology and is proven in the CRM space," she says. "The only risk for Microsoft choosing to go with Crystal is that there's no differentiation [in reporting tools]."

For potential Microsoft CRM users, the announcement shows that Microsoft may be leading with customer needs -- that is, the company is serious about getting the technology right. By picking more open and familiar tools, rather than developing tools in-house, Microsoft may be shaking off some of its proprietary coils. "By announcing a strong reporting tool from the get-go, before they even come to market, is a good sign," Spang says.