Part 1 of this blog series discussed the current upbeat state of affairs of Microsoft Dynamics CRM, as one of the three best-performing products within the entire Microsoft Corporation of late. In a nutshell, during 2009 the product grew significantly and surpassed its one millionth user. Microsoft’s customer relationship management (CRM) offering has become attractive to companies of all sizes, in part because it offers multiple deployment options (with bidirectional migration options due to the same code base).
The underlying technology developments mentioned in Part 1 have enabled the rapid innovation of Microsoft Dynamics CRM in many ways. The first illustration of the rapid innovation is the Microsoft Dynamics CRM Online offering, which was launched in April 2008 and has since had four feature pack releases (or service updates).
Dynamics CRM Online: Available and Going Places
Although still in its infancy, Microsoft’s software as a service (SaaS) CRM business is accelerating, with more than 50 hosting partners delivering on-demand CRM and other customized relationship management solutions. Microsoft says that its commitment to rapid innovation and 99.9 percent service-level agreements (SLAs) are driving interest and adoption within enterprise clients.
Differing from many other SaaS-based CRM offerings, Microsoft Dynamics CRM offers financially backed SLAs for Dynamics CRM Online, guaranteeing 99.9 percent uptime or the next month’s service will be at no cost. The giant has also indicated plans to expand its Dynamics CRM Online offering internationally, likely sometime in 2010 following the launch of its European data center.
The November 2009 service update for Dynamics CRM Online featured fast online access via streamlined sign-up, enhanced trial experience, and the ability to create a personalized system in five minutes (or less). For increased sales effectiveness, the release offered role advisors, personalized dashboards, data and process analysis, and Mobile Express (read/write access for browser-based mobile devices) capabilities. In terms of content management and data migration, the product now offers streamlined import of contacts and communication history, duplicate data management (data deduplication), and automated data import from Sage Act!, Goldmine, and Salesforce.com.
Choice + Cheaper = Even Better (for the Customer)
As mentioned in Part 1, affordability is yet another major factor in Microsoft Dynamics CRM’s adoption. In terms of pricing, Microsoft Dynamics CRM Online follows a monthly, per-user billing process: Microsoft Dynamics CRM Online offers a full suite of marketing, sales, and customer service features for US$44 per user per month. The price of a Microsoft Dynamics CRM 4.0 [evaluate this product] on-premise software instance will vary with the specific solution scope.
In terms of a side-by-side comparison based on publicly available information from Salesforce.com, Microsoft Dynamics CRM Online gives businesses the following:
With the recession still stubbornly looming over the world, and to encourage adoption of Microsoft Dynamics CRM Online, Microsoft also recently took the opportunity to target Salesforce.com and Oracle CRM On-Demand users with a special price promotion and easy migration offering. To that end, companies currently running Salesforce.com or Oracle CRM On Demand will receive six free months of the Microsoft CRM Online service when they sign up for an annual contract.
But even after that period, Microsoft says it’s providing at least 30 percent cheaper service than these two competitors, and in a pay-as-you-go manner (rather than with the annual upfront pre-payment that the competitors demand). Free offline access in Microsoft Outlook and free Mobile Express are other incentives, while eligible enterprise customers can qualify for partner implementation services vouchers.
Microsoft estimates that for 25 users Dynamics CRM Online costs only US$6,600 for the first 12 months (due to the first 6 months gratis), and $13,200 annually for subsequent years. In comparison, the Salesforce.com CRM Enterprise Edition costs US$19,500 per year for 25 users, while Oracle CRM On-Demand comes in at US$21,000 per year for 25 users.
Sure, these switch offerings will not attract massive customer defections, but the price factor will certainly prey on Oracle and Salesforce.com’s minds as the functional gap between these solutions becomes ever narrower (with the fourth major generation of Dynamics CRM). Microsoft is basically putting a bug in its competitors’ customers’ ears by telling them that they should not be overpaying for marketing hype.
Rapid Innovation via CRM Accelerators
CRM Accelerators are another illustration of ongoing rapid innovation at Microsoft Dynamics CRM. CRM Accelerators are no-cost add-on modules and capabilities for existing customers, which extend the capabilities of Microsoft Dynamics CRM. In the first wave of the Dynamics CRM 4.0 delivery (i.e., “Wave 1″) over a year ago Microsoft released the following 8 accelerated capabilities:
Dynamics CRM 4.0 Wave 2 saw the release of the Web-to-Lead accelerator and the abovementioned Mobile Express capabilities. Most recently, mid 2009 Microsoft released the Social Networking, Partner Relationship Management (PRM), and Portal Integration accelerators.
The CRM Accelerators have been “localized” in Danish, Dutch, Finnish, French, German, Hebrew, Italian, Norwegian, Portuguese, Spanish, and Swedish markets. To date, CRM Accelerators have exceeded 50,000 downloads to drive new customer value and partner innovation with Microsoft Dynamics CRM.
xRM: “Any (All) Relationship Management” Strategy
Accelerators are functional “add ons” to Microsoft Dynamics CRM that the vendor is making available to customers at no cost. The Accelerator solutions can be deployed as packaged extensions to Microsoft Dynamics CRM, or used to help develop customized relationship management solutions. In other words, in addition to extending the standard CRM functionality, these capabilities can also be relatively easily retrofitted to handle extended relationship management (xRM) functions.
As a case in point, during a recent Webcast I saw a demo by Success Accelerators, a Microsoft Dynamics CRM and Salesforce.com partner, which used the abovementioned eService Portal accelerator for a different relationship management purpose. Namely, while this accelerator was originally intended to be a customer service portal (as its name suggests), for this particular client Success Accelerators has re-tooled it to handle an “xRM” function, i.e. supplier management.
Thus, in addition to extending the standard CRM functionality with Accelerators, Microsoft Dynamics CRM is also demonstrating benefits as a development framework to manage broader relationships. Something Microsoft coined in the term “xRM”. In fact, using the existing CRM solution as a framework for development could be another way to reduce IT costs.
The xRM approach allows organizations to help improve the time to value in tailoring Microsoft Dynamics CRM to their business needs. In fact, custom-built applications continue to be a major force in the CRM marketplace. According to Gartner, currently up to 65 percent of CRM applications are built rather than bought off-the-shelf, although that percentage decreases every year.
Rather than expending many dollars and extended development cycles, organizations can streamline custom application development while retaining key connections to the core CRM system. Applications such as citizen/constituent management, employee management, vendor management, dealer management, sport player management, recruiting management, and contractor management are just a few examples of custom relationship management applications that have been built on Microsoft Dynamics CRM.
With Dynamics CRM being an established product and business (as described in Part 1), Microsoft has recently turned its attention to its xRM solutions. Microsoft’s goal is to follow the Microsoft Windows and Office Business Applications (OBA) blueprint and turn its Dynamics CRM technology into a framework that supports its own ecosystem of channel partners. By providing a ready-made framework (which term Microsoft seem to prefer over the term “platform”) for a plethora of possible relationship management business applications, Microsoft Dynamics CRM can help reduce the cost of these custom development projects while opening paths for future technology innovation.
Enter the xRM Framework
The term “xRM” first surfaced a few years ago, but at the time it was less a software category per se than a concept in search of a springboard. The launch pad arrived with the Microsoft Dynamics CRM 4.0 release. In addition to a multi-tenant architecture, the product’s other new capabilities (i.e., multi-stage workflows, smart search, presence information management, offline customizations, plug-in’s support, etc.) make Dynamics CRM a flexible and configurable application framework.
By leveraging familiar technologies such as Microsoft Office, Microsoft Office SharePoint Server (MOSS), Microsoft SQL Server, Microsoft Visual Studio, and Microsoft .NET Framework, the xRM framework is ready to support a variety of line of business (LOB) applications that go far beyond the traditional Sales Force Automation (SFA), marketing, and customer service functions and entities, i.e., contact, lead, and opportunity management.
Depending on how sophisticated the company wants to be with its development environment, it may want to have a Microsoft TechNet or Microsoft SQL Server Desktop Engine (MSDE) arrangement with Microsoft so that it can have a separate instance of Dynamics CRM for development purposes. There are also a large number of freely downloadable tools and add-ons available, many even on the CodePlex open source project community (which would sound heretical at many other Microsoft business lines).
Transforming Businesses with xRM
With its xRM capabilities, Microsoft Dynamics has been seeing growth in key industries such as public sector, financial services, professional services, manufacturing, telecom, and others. Microsoft is attempting to use xRM to broaden its potential customer base for Dynamics CRM and appeal more to the independent software vendors (ISVs), value-added resellers (VARs), system integrators, and internal IT organizations.
By being able to use a common and shared infrastructure, licenses, and resources (in a “one license, many applications” or application platform agreement [APA] manner), Microsoft’s customers and partners are beginning to develop such LOB applications. More than 50 industry solutions have been built on xRM platform capability, or there were the last time I checked at Microsoft Pinpoint, an online business marketplace for small and medium-sized business customers and partners.
For example, the City of London, U.K. has been using Microsoft Dynamics CRM as an xRM development framework (with help of Hitachi Consulting) to enhance the services it provides to citizens, businesses, and visitors, such as event planning and voter management. In some cases, the extension of CRM is straightforward, as the “x” in “xRM” might stand for equipment dealers, suppliers, investors, employees, or citizens (in public-sector cases, such as the above example).
But sometimes the “x” will stand for physical entities rather than people; think of managing programs/projects, fleets, assets, products, properties/facilities, grants, complaints, disaster response, crime scenes, etc. For its customer, Embrace Pet Insurance, Ascentium Corporation, another Dynamics CRM partner, combined Dynamics CRM with a custom web storefront to offer (as its name suggests) health coverage for cats and dogs. Objects in the xRM application represent not just policy-holders (i.e., owners as traditional customers) but also quotes, policies, and the pets themselves.
The final part of this series will conclude by analyzing the product’s competitive landscape. In the meantime, your views and comments are welcome as usual. If you are existing users of Microsoft Dynamics CRM (including its xRM derivatives), what have been your experiences with the product and what is your take on its future?
SFDC Enterprise is $37,500 for 1 year…
Thanks for your comment, CheckYourMath.
Those figures were provided by Microsoft in their campaign, and I assumed they did their own competitive intelligence thoroughly.
If you would like to elaborate your price tag calculation, I would highly appreciate it (and probably the other readers).