It is possible to migrate data from and existing system to CRM database using SQL statements.
Although microsoft recommends us not to use direct SQL statements, this method is easy as we don't have write code to migrate data. But we need to be very careful when we are doing this as we need to populate the references before migrating data.
I don't know whether CRM 4.0 provide a method to insert data to custom entities. CRM 3.0 doesn't provide us this. That is the reason why we have to choose an alternative.
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