Microsoft officially entered the market for on-demand enterprise applications Tuesday with the launch of Dynamics CRM Online in the U.S. and Canada. The launch is sure to add fuel to the already heated competition with chief rival Salesforce.com.
"We're seeing a lot of people switching from Salesforce.com," said Bill Patterson, product management director for Microsoft Dynamics CRM Online, referring to some of the 500-plus customers that have been using the Microsoft product on a trial basis. The Dynamics CRM Online Internet service has been in various stages of beta testing for more than six months.
Microsoft intends to play competitive hardball with Salesforce, pricing the Professional Edition of Dynamics CRM Online (with 5 gigabytes of data storage space, 100 configurable workflows and 100 custom entities) at $39 per user per month through 2008, increasing to $44 per user per month in 2009. The Professional Edition Plus (with 20 gigabytes of storage, 200 configurable workflows and 200 custom entities) is priced at $59 per user per month.
Salesforce's prices start at $20 per user per month for a group edition of its on-demand CRM application and $65 per user per month for the "full-featured" application, according to the company's Web site. Patterson said software-as-a-service competitors like Salesforce and NetSuite charge much more than Microsoft for data storage. "These aren't trivial amounts for a business that just wants to get started on a CRM system," he said.
Dynamics CRM Online also marks a potential change in Microsoft's relationship with its channel partners because customers can subscribe to the Internet service directly from the vendor. Solution providers can sell Dynamics CRM Online and host the application themselves or have it hosted by Microsoft.
While customers won't be required to work through a Microsoft channel partner to purchase Dynamics CRM Online, Patterson said the vendor "strongly encourages that customers work with a partner" given that implementing and tailoring the on-demand application to meet a company's business processes often requires the business and technical expertise that resellers offer.
"Our partners get our customers' business," Patterson said. As proof, he noted that of the 500 customers that have been testing Dynamics CRM Online, every one is working with a channel partner. Microsoft is offering channel partners 10 percent of subscription fees for the on-demand CRM application for the life of a customer contract.
Microsoft has trained more than 150 solution providers to work with Dynamics CRM Online, Patterson said, and another 150 ISVs. Many are likely to come from the ranks of resellers that work with the on-premise Dynamics CRM 4.0 application that Microsoft released just before the end of 2007. The on-demand and on-premise applications share the same code base.
Chicago-based Savo Group has integrated its on-demand knowledge management/collaboration application for sales and marketing staff with Dynamics CRM Online, says Jeff Summers, Savo executive vice president and chief marketing officer. The combined applications will provide sales reps with recommendations on what sales materials to use for different sales opportunities. Savo, a new Microsoft partner, won't actually be reselling the on-demand Microsoft service, however. "Literally every customer we are working with right now is looking at Microsoft CRM," Summers said. He said prospective customers seem to be excited to have an alternative to Salesforce.com.
One of Microsoft's marketing arguments for customer adoption of Dynamics CRM Online is that the Internet service works well with the vendor's office productivity applications. Earlier this month, in what was seen as a pre-emptive strike on the pending Microsoft debut, Salesforce and Google unveiled a new solution that marries office productivity applications with on-demand CRM.
Monday evening Salesforce CEO Marc Benioff, when told the Microsoft announcement would come Tuesday, mocked the Microsoft product's long gestation. "Haven't they already announced that five times?" he said.
Microsoft has not detailed its plans for making the Internet service available internationally.