• September 1, 2009
  • By Jessica Tsai, Assistant Editor, CRM magazine

Microsoft’s Million-Member March

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ffFor the rest of the September 2009 issue of CRM magazine please click here.

Microsoft certainly covered a lot of ground during its seventh annual Worldwide Partner Conference (WPC) in New Orleans in July. The company released several new products, updated others, celebrated milestones, and unveiled a roadmap that analysts seemed to consider very encouraging, especially in this economy and given the negative publicity of what one analyst called “The Black Eye”—the product Microsoft prefers to call by its official name: “Vista.”

In his keynote, Steve Ballmer, the company’s chief executive officer, highlighted eight critical areas of focus—and Dynamics CRM was rolled into the final one, under the heading of “other businesses.”

“We’re investing despite the economic downturn,” Ballmer said. “We will keep our [research-and-development] spending flat next year—$9.5 billion in aggregate, which is more than any other company in the world spends on R&D. It is a testament to our belief and our optimism about the future.”

That optimism must’ve been sorely tested of late: Just days after the conference ended,Microsoft announced a year-over-year drop in annual revenue for the first time in its history as a publicly traded company. A Gartner report released at roughly the same time, however, pegged Microsoft Dynamics CRM’s annual growth at 75 percent in 2008—compared to 12.5 percent for the overall CRM industry. (See “CRMMarket Grows for Fifth Straight Year,” below.) The launch of its Bing search engine and subsequent search-engine partnership with Yahoo! rounded out Microsoft’s midsummer roller-coaster ride.

Microsoft has long been known for its “holistic view of the business ecosystem,” says Paul Greenberg, founder and president of consultancy The 56 Group, adding that the company has grown in large part by using partners to “fill the holes.” That Microsoft Partner Program ecosystem, he says, now has the company successfully managing 360,000 partners in addition to 640,000 partner affiliates.


One million may seem impressive, but some analysts call it little more than hype.

“It’s almost a bit of an artificial milestone,” says Warren Wilson, research director at Ovum Summit, adding that Dynamics CRM has seen rapid adoption across its three delivery models—on-premises, partner-hosted, and CRM Online. “Customers can have it the way they want it,”Wilson says, echoing the marketing message recently espoused by Microsoft executives in interviews with CRM magazine.

Greenberg calls Dynamics CRM “highly competent,” and says it generates few customer complaints. He notes, however, that the software’s components for sales and customer service are significantly more robust than its marketing aspect—a problem Microsoft shares with competitors Oracle, Salesforce.com, and SAP.


Microsoft also updated its “xRM” initiative, which Wilson calls an “ ‘anything’ relationship management platform.” He also credits Microsoft for having “built so much flexibility into the platform,” enabling customers to develop solutions that fit their needs. Industry-specific examples include player management; task force management; coroner management; supplier relationship management; and quality management.

The power of the platform is a trait Microsoft has been trying to underscore for some time.At Microsoft Dynamics CRM Incubation Week last December, a handful of companies each spent five days developing an application on the Dynamics CRM platform. Greenberg, who was one of the judges for that event, says now that he was amazed as developers created capable, usable applications on the software—an offering that the marketplace rarely refers to as a platform.


Microsoft formally announced at the WPC that Windows Azure, its cloud-computing offering, would go on sale at the company’s Professional Developers Conference (PDC) in November—more than a year after first detailing the solution at 2008’s PDC last October.

Azure aficionados, however, discovered that they didn’t have to wait that long—or pay anything at all, at least for the time being: At the WPC, the company made available free downloads of a preview version of Azure.

Doug Hauger, general manager for the Windows Azure division, told WPC attendees that the purpose of the free period is “to build the market momentum for all of you, as partners, to start learning the skills, building the applications, getting on top of the platform, building your services practices, and really understanding how it integrates with your business[es].”

When the free trial period ends in November, two variants will be available—a basic edition ($9.99 per month) and a business edition ($99.99 per month, including a 10-gigabyte database)—and consumption-based pricing will kick in: $0.12 per hour for computing and $0.15 per gigabyte per month for storage.

Wilson says the plan sounds very promising, but he’s concerned about delaying general availability until November. The intervening time, he says, gives competitors the chance to establish momentum around their online offerings. Salesforce.com and even Amazon.com, he says,will take the opportunity to expand their footprints as much as possible. The established players in the cloud-computing market may make Microsoft seem like a late  arrival in the eyes of early adopters, Wilson says, but the market’s relative immaturity means there’s plenty of time for Microsoft to catch up. “The best days are still ahead and Microsoft’s going to be a strong competitor,” he says.


To stave off the threat of online competitors—notably Google’s Google Apps—Microsoft is finally bringing its popular Office suite of productivity tools online.

The 56 Group’s Greenberg, an admitted Office fan, says the software takes some getting used to, given its sophisticated functionalities. The complaint about Google Docs, he says, was that its functionalities were limited, but Microsoft is hoping to find a middle ground—not by dumbing down the overall offering, but by making it possible to shut off certain features. Given the ongoing popularity of the on-premises version of Microsoft Office, Greenberg says that “if—and that’s a big if—Microsoft can offer the same capability that Google Docs offers … people are going to go with the familiar.”

Some Microsoft competitors are hoping that familiarity will breed contempt. Zoho, one of the upstart providers of on-demand productivity applications, responded to Microsoft’s announcement with some rhetoric of its own.

The industry’s growing affinity for cloud-based applications forced the move, Wilson says. “If Google weren’t there with Google Apps,” he says, “Microsoft would have preferred to keep Microsoft Office on-premises.” Just as Microsoft couldn’t ignore the demand for online applications any longer, Wilson says, the Googles and Zohos of the world now have to keep an eye on Microsoft if they want to survive.


In March,Microsoft made available eight CRM Accelerators at no additional cost to users of its Dynamics CRM application. As downloads for those accelerators crossed the 50,000 mark, the company announced the addition of new ones:

  • Social Networking Accelerator—allows businesses to monitor and analyze consumer conversations on social networking sites (though only Twitter for the moment);
  • Partner Relationship Management Accelerator—allows businesses to manage sales leads among channel partners; and
  • Portal Integration Accelerator—allows organizations to connect Dynamics CRM to their online business processes through “point-and-click configuration,” rather than Web development.

“They’ve done a very good job with the Social Accelerators,”Greenberg says. “It’s limited, but it’s a start.”He adds, however, that the social CRM component was long overdue. “[Microsoft has] been exceptionally slow,” he says. Having “pretty much owned what was the traditional infrastructure,” Microsoft’s social debut means “integrating with things [it has] no control over.”

Finally connected to social media, analysts say that Microsoft now has to follow through. Wilson argues that the opportunity window may not have been as small as it seems, just because Salesforce. com jumped on social integrations earlier. “It was time that Microsoft did this,” he says. “But I don’t think the fact that they had not done it until now had cost them anything in particular.”

“The best thing Microsoft can do is announce partnerships with social monitoring platforms,”Greenberg says.“Integrate with those and [it] will be caught up fast.” Greenberg says that, as one of CRM’s Big Four—along with Oracle, SAP, and Salesforce.com—Microsoft’s size may help the company catch up, but only to a point. “They’re not going to lead the space,”Greenberg says. “They’re going to be players [but] I don’t see them leading it.”

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