Better Make Some Room

Page 1 of 2

Microsoft's shipment of the long-awaited "Titan" release of the company's Dynamics CRM application is sure to fuel the debate over whether the future of CRM and business applications is on-premise or on-demand software.

Microsoft Dynamics CRM 4.0, as it's officially known, offers solution providers and their customers the choice of taking the traditional on-premise application route or moving to an on-demand or software-as-a-service (SaaS) model. Microsoft, meanwhile, will provide a version of the product called Dynamics CRM Live that's hosted in Microsoft's own data centers. Dynamics CRM and Dynamics CRM Live are built on the same code base.

Microsoft is hardly blazing new territory here. Salesforce.com has been pioneering on-demand CRM for years and in December surpassed 1 million paying subscribers at more than 38,100 businesses and organizations. And even Microsoft isn't overemphasizing the on-demand vs. on-premise angle.

"It's simply a different way of buying [CRM] technology," insists Brad Wilson, Microsoft CRM general manager.

The CRM Picture
Redmond, Wash.-based Microsoft's first major upgrade of its CRM application in more than three years is sure to boost the CRM software market. Not that it needs a boost: CRM software sales and revenue from related hosting and technical support services reached $7.39 billion in 2007, up 14 percent from one year earlier, according to market researcher Gartner, Stamford, Conn. Sales are expected to grow more than 12 percent this year to reach $8.32 billion.

Sales are growing across all segments of CRM, according to Gartner, including applications for salesforce automation, marketing and customer service. But sales of on-demand CRM applications are growing at twice the clip of the overall CRM market and now account for 14 percent of that market or more than $1 billion.

"There's a lot of migration from on-premise to on-demand," said Joe Bergera, executive vice president of CRM Solutions at Irvine, Calif.-based Sage Software, which offers its Sage SalesLogix and SageCRM applications for SMBs, the latter in on-premise and on-demand versions.

Solution providers say Microsoft's move into SaaS is significant.

"Microsoft is going after the SMB market with Dynamics CRM Live," said Richard Smith, CRM strategy vice president at Green Beacon Solutions, a Watertown, Mass.-based IT consulting services provider and Microsoft partner. As Smith sees it, small companies can start out with the Microsoft-hosted version of the application and then—given the common code base—easily migrate to an on-premise version of the application when business needs dictate. "That's something you can't do with Salesforce or anything else that's hosted," Smith argued.

Channel partners can sell Dynamics CRM as an on-premise application or offer it as a hosted application. IT services provider CenterBeam will likely begin reselling the Microsoft CRM application early this year and provide a hosted version as well, said Karen Hayward, executive vice president. The San Jose, Calif.-based company already hosts Microsoft Exchange for customers and Hayward said integrating CRM with Exchange is a natural extension of that.

While Microsoft will host Dynamics CRM Live for customers within its own data centers, Wilson envisions Microsoft channel partners providing business consulting, configuration and vertical industry services around the hosted application. "We still think there's a significant role for partners in this space," Wilson said.

Green Beacon Solutions plans to offer such services for on-premise and on-demand versions of the Microsoft application— although it will leave hosting to other companies—and for Dynamics CRM Live. Microsoft has promised 10 percent of the annual subscription license fees to solution providers who serve as sales agents for Dynamics CRM Live.

Perhaps the most significant technology enhancement of the new Dynamics CRM release is its multitenancy architecture that allows a single hosted instance of the application to support multiple customers rather than requiring a separate instance for each customer. Salesforce.com, a head-to-head competitor to Microsoft's hosted CRM, has long touted the multitenancy of its on-demand CRM applications as a competitive advantage.

Microsoft Dynamics CRM 4.0 will use the same Windows Workflow Foundation model, engine and tools found in SharePoint and other Microsoft software for building workflow-enabled applications. Dynamics CRM sports enhanced reporting and analysis capabilities based on the Dynamics CRM Analytics Foundation software Microsoft unveiled earlier this year that bundles reporting, ad-hoc analysis, predictive analysis and business performance management tools into one package. Dynamics CRM 4.0 also supports multiple languages and currencies.

Next: A Crowded Field

1 | 2 | Next >>

Tweet

   

More Applications & OS