Microsoft To Slash CRM Hosting Subscription Fees For Channel Partners

The price cut will be among several announcements Jeff Raikes, president of Microsoft's Business Division, plans to make in a keynote speech Tuesday at the vendor's Convergence 2007 conference in Copenhagen. Raikes is also expected to talk about the momentum for Microsoft Dynamics CRM 4.0 -- the upcoming release of the CRM app known as "Titan" that's due by year's end -- and new channel partners that have committed to hosting the software.

While most VARs resell Dynamics CRM as an on-premise application, some 650 channel partners offer the application to their customers on a hosted basis for which Microsoft charges the solution providers $25 per user per month. With the 40 percent price cut that fee will drop to $15 per user per month, says Bryan Nielson, director of worldwide product marketing for Dynamics CRM.

"That ought to make us very competitive," says Greg Loseke, manager of the dealer services department at Sandhills Publishing, a Lincoln, Neb., solution provider. The company hosts Dynamics CRM for construction, trucking, agricultural and aircraft equipment dealers. But Loseke said the Microsoft product has another advantage over Salesforce.com besides price: "We're able to provide better service to our customers because we're hosting it ourselves."

For Axonom, a Minneapolis solution provider, price isn't as big a selling point as the value the company provides through the application stack it has built on top of Dynamics CRM, including product configuration, call center, time and billing, forecasting and partner portal apps designed for high technology manufacturers. "That's where we're competing. We go for very deep solutions. This isn't sales force automation," said Mike Belongie, Axonom sales vice president.

Belongie sees Salesforce.com as the biggest competitor to Dynamics CRM, although he said the Microsoft product's pricing is already competitive. Sandhills Publishing's Loseke said he most frequently runs into Sage Software's Act! and SalesLogix. Pricing for Salesforce.com's on-demand CRM apps starts at $10 per user per month for a group edition and at $65 per user per month for "full featured" CRM apps.

Last month SAP unveiled its Business ByDesign on-demand application set, including CRM capabilities, targeting mid-market customers. That's priced at $149 per user per month for the complete Business ByDesign package with a minimum of 25 users. NetSuite also competes in this market with its line of on-demand CRM applications.

Raikes will name a number of new international channel partners that have committed to hosting the Dynamics CRM 4.0 application, including Mondo A/S in Denmark, JayThom Pty Ltd. in Australia, EveryWare AG in Switzerland and Increase Ltd. in the U.K.

Enlisting hosting partners outside of the U.S. is particularly important for Microsoft because the vendor's Dynamics Live CRM service " the on-demand CRM service Microsoft will itself host " initially will only be available in the U.S. and Canada.