Microsoft: Expecting a Live Baby

When Microsoft Dynamics CRM announced plans this July for releasing an on-demand solution--Microsoft Dynamics CRM Live--in the second quarter of 2007, company CEO Steve Ballmer called it the least surprising announcement in Microsoft history. Industry pundits, Microsoft partners, and SMBs had to agree. Despite very public statements the company had made denying development of an SaaS product, it was clear that after the release of Dynamics CRM and the continued success of Salesforce.com, the only place for Microsoft to go was live. Despite its late arrival--Dynamics 3.0 came to market in January 2006 as the long-delayed successor to Microsoft CRM--Microsoft has done well to remain an important force in the space. The software has already acquired 220,000 users worldwide only seven months after its release, with 50,000 new users added in the past quarter alone. However, with the release of Live about a year off, will the company be able to catch up enough to be successful? Will the Microsoft name be enough to counteract the Microsoft wait? "The punch line here is that CRM Live is important to Microsoft for a number of reasons," says Liz Roche, managing partner at Customers Incorporated, "but from an end-user's perspective, this product won't be available for [about] a year. A year is just too long of a planning horizon." Others believe that the capabilities and functionality that will be offered by CRM Live will more than make up for the time difference. Jim Heaton, president of Microsoft partner VOX Wireless, is one of them: "The product is far superior to what they will go head to head with in the market." Although Heaton clearly has a stake in the product's success, he goes as far as to predict that Microsoft's SaaS option will be the "death knell" for Salesforce.com. Microsoft claims it will have a distinct leg up insofar as CRM Live will use the same coding as the upgraded on-premise CRM 4.0, code-named Titan, which will be released alongside Live. This will allow Microsoft partners to develop prepackaged solutions and deploy them for their customers. The depth of integration between the different solutions will allow customers to switch seamlessly between deployments, according to Microsoft. Additionally, the system, which will be managed by Windows Live data centers, will have the look and feel of an Office solution. "The holy grail for the last five years has been CRM capabilities that incorporate tightly with Office," Roche says. While SAP and Oracle (including Siebel Systems) have Outlook connectors, Roche reports that coming from Microsoft, CRM Live will undeniably be better and more tightly integrated. But a year from now, Roche wonders, "Who will really care?" The integration between Office and other solutions may be tight enough at that point, she argues, that this will not be a strong selling point. On the mobile side, deep integration with other Microsoft technologies may be a hindrance, says Jack Gold, founder and principal analyst for J. Gold Associates, as Microsoft has made no moves yet to make CRM Live accessible through other vendors' handheld devices. Gold explains that many users could be deterred from adopting CRM Live if the solution is only accessible through Microsoft devices. "Being forced into that is not a good marketing stance," he says. Microsoft is not known for being first to market, but that has yet to cripple its development. To whatever extent CRM Live succeeds, the last word may be what it says about the direction of the industry as a whole. As Roche expresses, "When Microsoft gets into on-demand, it must be here to stay."