Part 1 of this 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 notably and surpassed one million licensed users. Microsoft’s customer relationship management (CRM) offering has become attractive to companies of all sizes, in part due to its multiple deployment options (with bidirectional migration options due to the same code base).
Certainly, much more has to happen before there is truly a common feature set, a common look and feel, and a feasible option to move any company from one mode of deployment to another. The market will thus be keenly looking for referenceable customers from Microsoft who have done this migration even in one direction, let alone as a “round trip.”
The underlying technology developments mentioned in Part 1 have enabled rapid innovation of Microsoft Dynamics CRM in many ways. Part 2 analyzed the following embodiments of rapid innovation: the Microsoft Dynamics CRM Online offering, CRM Product Accelerators, and the so-called xRM (extended relationship management) framework. The xRM approach takes CRM one step further by targeting the management of all imaginable relationships, not just those with customers.
CRM Platform Wars
As analyzed in TEC’s article “War Looms in the On-demand CRM Market (and Beyond)—But Will You Profit from It?” and in my recent blog post on NetSuite, Salesforce.com and NetSuite have been attempting similar xRM feats with their respective AppExchange and SuiteApp application directories, Apex and SuiteScript languages, and Force.com and SuiteCloud platforms. Similar to Microsoft Dynamics CRM or xRM, many Salesforce.com partners have built applications that go beyond the traditional CRM realm, whereby these custom applications built on Force.com manage orders, contracts, proposals, assets, and whatnot.
I must acknowledge here that Force.com applications were being built for order a year before Microsoft shipped its Dynamics CRM 4.0 release. Microsoft was neither first to attempt nor leader in fulfillment of the xRM platform vision.
Some notable innovations on Salesforce.com’s Force.com platform include the FinancialForce.com accounting offering in the cloud (co-owned by UNIT4 and Salesforce.com), then an application that tracks investment funds from StraightThrough.com, and the one that generates “business intensity maps” in the US from ACF Solutions. At the Dreamforce 2009 conference, I saw a demo of a neat Force.com-based application for golf course tee-time reservation via Facebook and the Chester French indie rock band that has its Facebook VIP fan page (with e-commerce capabilities to sell upcoming concert tickets and band merchandize), also built on Force.com.
The question is then how to compare these xRM platforms. I should note here that the xRM Framework is currently unavailable to Dynamics CRM Online customers. Also, Microsoft is unclear about how xRM integrates with its stated cloud computing strategy and platform, Windows Azure.
The question is then how to compare these xRM platforms. In other words, why should one go for a certain platform–and are they quite comparable in their capabilities? That is a tough question to answer in a blog post, but here is a quick analysis.
In addition to unified communications (UC)/presence information capabilities (although some Salesforce.com partner offerings might be giving comparable capability to Force.com customers) and the native Microsoft Outlook look and feel (although Salesforce.com says that independent research has shown Outlook might be harder to learn and more complex to use than Salesforce.com’s UI), Dynamics CRM claims a few advantages over Salesforce.com, such as the following:
Competitors Do Have Something to Say
On the other hand, companies continue to buy Force.com because of Salesforce.com’s proven business model, reliability, service record, strength in the market (nearly US$ 1.5 billion in revenues, which dwarfs Microsoft Dynamics CRM), technology roadmap, very large reference sites, etc. Salesforce.com questions whether all costs of licensing, maintaining, and operating Dynamics CRM have being fully incorporated in the above comparison, since the ongoing costs of Microsoft solutions can be substantial.
Namely, is any value being accorded to the thrice-yearly upgrades of Salesforce.com capabilities that are fully included in the subscription fee, as opposed to the substantial costs (visible and less visible) of purchasing and deploying upgrades to the Microsoft suite? License fees merely begin a stream of costs, notably those of administering “Patch Tuesday” updates (i.e., October 2009 set a record for size and severity) and those of re-writing applications to track the moving target of the Windows desktop environment, as most enterprises simultaneously use more than one version of Windows.
Windows XP will likely co-exist with Windows Vista and Windows 7 for many years to come and developers bear the burden of supporting their code, and of testing and deploying updates, in those multiple environments. Conversely, such costs are essentially subsumed, entirely, in the Salesforce.com environment as part of its simple and predictable (albeit possibly steep) subscription fee.
At the Microsoft Dynamics Fall Analyst Event, a week before Dreamforce 2009, Microsoft claimed that once its CRM teams manage to get in the final showdown with Salesforce.com, their win rate is 78 in North America. Sure, Microsoft Dynamics admitted there that it can be challenging to get into the final-two showdowns in the first place due to Salesforce.com and Oracle’s CRM business size, mind share, vertical focus, etc.
One might also infer that Microsoft is only in the final showdown when there is a strong predisposition toward an all-Microsoft solution. Thus the above figure could also be described as Microsoft acknowledging that even among customers whose initial preference is an all-Microsoft environment, Salesforce.com and Oracle still convert more than one in five of those opportunities.
On the xRM front, a key difference is that AppExchange, Force.com and Apex or SuiteApp, SuiteCloud and SuiteScript are all sub-brands and legitimate engines (a la Microsoft Windows) under the Salesforce.com and NetSuite umbrellas, while xRM is a generic concept that Microsoft hopes to establish as a software category in which it will become the leader. In fact, Microsoft has been struggling with articulating exactly what xRM is, or is not. Perhaps this eight-year-old eWEEK article can shed some light and some ideas in that regard?
Some internal friction could ensue as Microsoft Dynamics CRM (and xRM, indirectly) begins to compete internally with other Microsoft products as a development framework (given that it even embraces some open source concepts, as mentioned in Part 2). Even more, there could be some fricition from possibly cannibalizing ISV partners’ solutions via the ongoing delivery of the abovementioned CRM Accelerators.
CRM Accelerators address many functional holes in Microsoft Dynamics CRM. If the Dynamics CRM Online users cannot leverage CRM Accelerators, as it seems to be the case, they therefore must live with the functional gaps.
CRM Accelerators are also not supported by Microsoft, since the users simply get the code downloaded (open source). This might be considered risky by prospects for core CRM processes such as Web-to-lead. It is unclear how CRM Accelerators will be supported through upgrades, a risk factor for any customer looking to upgrade to Dynamics CRM 5.0 next year.
The fact that xRM does not have its own product number (a partner or customer buys a license for the platform components, as described in Part 2) might be one indication that xRM is still in its formulative days. This problem might arise from Microsoft being a product-centered company, trying to lead a service-centered revolution from behind. Conversely, Force.com enables partner solutions and is a capability, not a product.
We find that businesses that have fewer information technology (IT) resources and/or that prefer to outsource more of their IT efforts gravitate towards Salesforce.com. Conversely, those businesses that already have a strong IT infrastructure, and particularly if they are already a “Microsoft Shop,” tend to gravitate more towards Microsoft Dynamics CRM (including xRM). Some facetious minds from Microsoft’s competitors might call this an example of Stockholm Syndrome at least as much as an indication of actual preference, on the part of organizations that are already heavily invested in Microsoft technologies (and have become somewhat numb to the pain and the costs that result).
Competitors also point out that due to Microsoft’s volume bundling practices for Client Access Licenses (CALs) customers are often licensed for capabilities they don’t really use, making much of the claimed software market “shelfware.” Microsoft’s celebrated number of 1 million CRM users are licensed users, not actual active users, as Microsoft has no really a way of knowing what on-premise licenses are actually in use. Contrast this to Salesforce.com, which can see which users are active and how they use the applicationm (or not).
The bottom line is that a prospective customer would probably want to spend quite a bit of time on the front end evaluating this decision to determine what the right path is for their organization. For more information on the CRM market in general and its major players, here is a good article from ZDNet.
In addition, there is always TEC’s CRM Evaluation Center. This might be a good start only, since a main point of the article is that this is no longer about the CRM market, but increasingly about the application platform market.
Keeping Abreast of Trends
In mid 2009 Gartner suggested the following five inexpensive CRM strategies for enterprises:
These sentiments were pretty much reflected in my recent blog series entitled “These Are the Times of CRM Vindication and Validation.” To that end, Microsoft Dynamics CRM product marketing tesm shared with me its alignment with the strategies outlined above. The following are the five suggested strategies and Microsoft Dynamics CRM’s responses to them:
Dear readers, what are your views and comments in this regard? Do you agree with our assertions of the product’s traditional good traits and flaws? If you are existing users of Microsoft Dynamics CRM or its xRM derivatives, what have been your experiences with these products and what is your take on the product’s future?
While in different interactions with different CRM experts and users, my opinion is that Microsoft Dynamics is a great option for most organizations, but NetSuite (and not Salesforce.com) scores over MS Dynamics in few usability features. So the battle in future will be between these 2 players I believe
Thanks for your article — it was very informative.
I would like to point out one very significant weakness of the MS solution as it stands today (when compared against Salesforce.com’s model) — MS Dynamics CRM Online does not support custom pages.
This may seem trivial at first as most screens are available. However, when there is a desire to apply specific business rules and controls, CRM Online unfortunately cannot accommodate this.
Of course, this may be addressed in the future with newer versions.
That being said, the extremely compelling platform is definitely a boon to application developers and designers as you could conceivably design your own solution to run on the Online framework and take full advantage of its metadata and validation engine, and still maintain control over your GUI.
Overall very informative. But, I am still confused with what licensing is required to use a business application developed on the xRM platform when no CRM is required.
Do you have any insight on how licensing works in that situation?