While Microsoft Corporation has not usually been that forthcoming about breaking down its revenues per individual product lines, during one earnings announcement call for financial analysts in 2009, the worldwide leader in software, services, and solutions for people and businesses pointed out the following three products as its best performers: SharePoint, Microsoft Unified Communications, and Microsoft Dynamics CRM. In fact, as stated in my previous blog post on Microsoft’s technology for enterprise applications, Microsoft Dynamics CRM and Microsoft Dynamics AX (formerly Axapta) already have built-in unified communications (UC) traits and collaborative SharePoint portal capabilities.

Microsoft claims that its so-called “CRM+” combination (i.e., Dynamics CRM and SharePoint) has become a compelling customer value proposition. The entire Microsoft Dynamics portfolio is now an over US$1 billion business with more than 300,000 worldwide customers and 10,000+ business partners. Still, the entire Dynamics line of business had a 7 percent decline in Fiscal 2009 (although Microsoft has kept almost religiously mum on providing financial data on individual Dynamics product lines). 

Dynamics CRM’s Growth Spurt

Contrary to the downward trend for its four enterprise resource planning (ERP) brethren, the Microsoft Dynamics CRM product (although still only a fraction of the overall Dynamics revenue) grew significantly in revenue year over year and surpassed the one-million-users mark in 2009. The customer relationship management (CRM) suite consisting of marketing automation, sales force automation (SFA), and customer service modules now has over 20,000 corporate customers from small businesses to large enterprises in over 80 countries and over 40 languages. More than 4,000 partners deliver Dynamics CRM software and services worldwide, and the company has more than 50 partners worldwide that are offering Microsoft Dynamics CRM as a partner-hosted service.

Certainly, Oracle Corporation remains the world’s CRM leader with 5,000 of the largest customers, 4.6 million users, and 125 million self-service users. Oracle’s CRM, business intelligence (BI), and customer data integration (CDI) products include Oracle Siebel CRM, Oracle CRM On Demand, Oracle E-Business Suite (EBS), Oracle PeopleSoft Enterprise, and Oracle Contact Center Anywhere (CCA). For its part, Salesforce.com boasts nearly 70,000 corporate customers and 2 million on-demand subscribers for its sales and service cloud computing offerings. But Microsoft Dynamics CRM [evaluate this product] points to that fact that it grew to one million users in just over six years while other vendors took more than eight years to achieve the same milestone.

What we are seeing and hearing is that Microsoft customers are choosing Dynamics CRM for its fast deployment, native Microsoft Office user experience (UX) design, flexible customization (made easy through metadata-driven definitions and point-and-click configuration), ease of integration with existing systems (due to native Web Services architecture), and affordability. From partners, Microsoft is hearing that deal sizes are increasing between 40 and 80 percent with the use of available marketing assets in the Microsoft Partner Network.

Who Are Microsoft Dynamics CRM Customers?

In general, there is no typical Microsoft Dynamics CRM customer amongst those 20,000 customers and one million users. Microsoft Dynamics CRM is being used by small, medium, and large enterprise organizations in a diverse range of industries, including financial services, manufacturing, the public sector, retail and hospitality, health and life sciences, and entertainment. The product is continuing to see strong growth in terms of seats and revenue, and this growth has not been limited to one particular market segment or geography.

But the offering is certainly most attractive to the many organizations around the world that already use a wide variety of Microsoft technologies and platforms, such as SharePoint, .NET Framework, Internet Information Services (IIS), and SQL Server. Microsoft Dynamics CRM can amplify the value of those products through its seamless connectivity and tight alignment.

First and foremost, organizations have the luxury of using a functional CRM product natively within Microsoft Office Outlook. In addition, companies that already use Microsoft Office can take advantage of built-in Word mail merge capabilities, e-mail templates, Microsoft Office Excel reports, and easy data transfer between Excel and Microsoft Dynamics CRM.

Embedded presence capabilities from Microsoft Office Communications Server allow Microsoft Dynamics CRM users to instantly see the status (availability) of their colleagues and easily initiate communication. Moreover, seamless connectivity with Microsoft Unified Communications Manager allows organizations to intelligently route calls and provide relevant pop-up screens with associated customer details.

Microsoft Dynamics CRM analysis capabilities are built on the Microsoft SQL Server Analytics Services (SSAS) foundation that provides an array of BI, analysis, reporting, and data visualization technologies. Streamlined connectivity with Microsoft Office SharePoint Server (MOSS) allows users to further benefit from collaboration, document management system, and enterprise search capabilities within Microsoft Dynamics CRM.

As mentioned in my previous blog post on Microsoft’s technology for enterprise applications, the embedded Windows Workflow Foundation (WF) technology provides workflow automation capabilities with inherent flexibility and extensibility. Last but not least, the alignment between Microsoft Dynamics CRM and its Microsoft Dynamics ERP brethren allows organizations to achieve visibility of their entire business by holistically tracking and managing customer, product, and billing details.

Not Only for the “Little Guy”

Where Microsoft remains frustrated, though, is in the persevering market perception that its CRM system is largely suitable for smaller businesses, whereas in reality half of Dynamics CRM customers are large enterprises. In the fall of 2009, Microsoft highlighted several global enterprise organizations that have selected Microsoft Dynamics CRM as their relationship management solution.

Using Microsoft Dynamics CRM, these customers have reportedly seen notable results and economic benefits, such as an increase in sales by 20 percent, or response times decreasing from days to just hours. The related press release (PR) offers additional information on marquee Microsoft Dynamics CRM customers including: Barclays Bank PLC, the City of London, United Kingdom (UK), Booz Allen Hamilton, Hard Rock International, Maccabi Healthcare Services, Polaris Industries, Inc., and Vodafone Iceland.

To further emphasize its enterprise-class capabilities, in mid-2009 Microsoft released an enterprise scalability benchmark study that was conducted together with Intel. The study claims that compared to Oracle Siebel CRM Release 8.0, Microsoft Dynamics CRM 4.0 reduced the hardware cost per user by a whopping 94 percent (i.e., US$0.65 vs. US$10.71). In addition, the Windows Intel processor architecture reduces power consumption by 30 percent vs. Oracle Database 10g R2 on Sun SPARC Enterprise T5440 server running the Sun Solaris 10 operating system. The benchmark report also touts multiple times better results for Dynamics CRM in terms of the number of users, transactions, and response time.

Customer Choice Is Good

Although for the first several years Microsoft Dynamics CRM was mostly on-premise software, Microsoft got its act together in December of 2007 with the release of Microsoft Dynamics CRM 4.0, which offered multiple deployment choices to prospective CRM customers. Code-named Titan, this release was instrumental in enabling cloud-based CRM, with its multi-tenant shared-server architecture well suited to the software as a service (SaaS) model. Also critical in this regard were several other new capabilities in Titan, including support for plug-ins, many-to-many entity relationships, improved multi-stage workflow capabilities, and support for user-defined entities (objects) that can represent tasks or documents as well as individuals.

Still, as the most important feature, native multi-tenancy provides support for infrastructure optimization and the ability to support three deployment models on one code base, i.e., traditional on-premise, hosted by a partner, or hosted directly by Microsoft. After years in development, Microsoft Dynamics CRM 4.0 (commercially replacing the Titan code name) allowed Microsoft to compete head-to-head with Salesforce.com, NetSuite, Oracle CRM On Demand, and RightNow, as the poster children for SaaS in general and on-demand CRM in particular.

The multi-tenant architecture development has allowed Microsoft to offer the on-premise (to own) as well as on-demand (to rent) choice to the CRM market, without having to support multiple products and code bases. Microsoft provides the following purchase options for Microsoft Dynamics CRM to help organizations get the best possible value out of their investment:

• The on-demand Microsoft Dynamics CRM Online offering minimizes up-front costs and allows organizations to pay a reasonable monthly subscription cost while getting the full features of Microsoft Dynamics CRM.
• The on-premise Microsoft Dynamics CRM 4.0 offering has one of the lowest total costs of ownership (TCO) in the market and is available for companies who want greater control in how they implement and manage their CRM system.

Moreover, organizations have the ability to switch between on-demand, partner hosted, and on-premise offerings by virtue of the offerings being built on the same platform and code base. I know, not many companies will decide to migrate one way or the other any time soon after the implementation, but the “customer choice” can never hurt (except for, perhaps strangely enough, in the still-raging US healthcare reform debate, but I digress). Microsoft also provides organizations with special financing options and offers.

For many mid-sized and larger companies, using a combination of deployment models with tight data integration to ensure a consistent customer view may make the most sense. For example, an organization with a large centralized marketing operation as well as several geographically dispersed sales teams could benefit from an on-premise marketing and loyalty application that scales to meet their most demanding requirements, and an on-demand SFA solution that is easy for salespeople to use and that requires minimal IT support.

While it’s an over-used phrase, “one size does not fit all,” and no organization should evaluate new CRM solutions without assessing the deployment options. Companies should beware of those vendors that cite on-demand CRM or on-premise CRM as being the “only” right solution. Instead, a company’s business needs as well as its IT organization’s requirements should dictate the deployment decision.

Part 2 of this series will analyze a number of ways that have been enabling the rapid innovation of Microsoft Dynamics CRM. In the meantime, your views and comments are welcome as usual. If you are existing users of Microsoft Dynamics CRM, what have been your experiences with the product and what is your take on its future?