The next version of Microsoft's Dynamics CRM application will contain several new features that the company hopes will help drive sales to both traditional customers and channel companies intending to sell access to a hosted version. It's unclear, however, whether the release will change much in the CRM market other than to give Microsoft resellers another option on their sales cards.
Microsoft showed a demo of the upcoming CRM release, code-named Titan, at its Convergence conference last week, highlighting its new Software as a Service (SaaS) capabilities.
The existing version of Microsoft CRM lets partners host the software, but Titan will use a multitenant database that can store data for many customers without confusing the data of one with another.
Microsoft's current version, CRM 3.0, uses a separate data store for each company. A multitenant system will be more efficient for hosted-application providers because it eliminates the need to create or maintain a separate database for each customer, according to Microsoft executives.
Microsoft will also host its own edition, Dynamics Live CRM, which it will launch when Titan is officially released later this year.
This three-pronged approach -- in which the application can be hosted by the customer, the service provider or by Microsoft -- does change the potential product mix for Microsoft resellers, but probably won't threaten integrators who focus on installing CRM software at a customer's site, according to Liz Herbert, a senior analyst at Forrester Research, Inc., a Cambridge, Mass.-based analyst firm.
It will push service providers that host relatively vanilla editions of SaaS CRM to differentiate themselves from Microsoft's Dynamics Live service, however, Herbert said. Those SaaS partners will have to create vertical-market editions of CRM or shift their emphasis toward other services, like process consulting, she said.
Despite the new hosting models and customization options -- such as templates that users can apply to their SaaS editions -- Microsoft CRM's key strengths still lie with its ease of use and its familiar, Outlook-like look and feel, Herbert said.
"At the end of the day, I think [multitenancy]'s more a way to get economies of scale, so this shared infrastructure means that people can more easily scale up and down," she said.
Microsoft CRM also integrates with other Microsoft products better than other vendors' products, said Ashif Mawji, CEO of Upside Software Inc., a software company in Edmonton, Alberta that develops contract management software. Upside's software integrates with Microsoft CRM, which it also resells, so that users can easily generate a contract from the same interface they use to close a lead.
Titan's integration with Office is paramount for this, Mawji said, and the multitenant architecture "is very important because that's the model the small businesses are going to prefer" because of the lower cost associated with the multitenant database.
As to whether large, vertical hosting partners will create a strong channel of their own, Mawji said that is up to each partner's business model, and Microsoft is being "very, very flexible" in negotiating reselling contracts.
Many of Microsoft's existing CRM partners have already shifted their emphasis from straight installations to process consulting, according to Christian Pederson, senior director for Microsoft Dynamics CRM, so Titan should not disrupt those channels.
"A big, big part of [deploying CRM] will be to help customers translate their business resources and processes into IT, and into streamlined workflows and processes and so forth -- and the need for that doesn't go away," Pederson said.
Rather than trying to control how Titan will specifically affect the channel, Microsoft is making sure its partners are aware of the new technology and letting the chips fall where they may, he said.
"In terms of actually shaping the channel, we think our primary role is to enable the channel," Pederson said. "The channel shapes itself up in terms of verticals and so on."
Pederson would not disclose details such as partner discounts or the specific relationships between partners and Microsoft, since the software is has not yet been released.
Microsoft plans to release Titan in the fourth quarter of 2007. About 300 partners are currently using the prerelease version; and Microsoft plans to increase that number that next quarter.
One of the advantages Titan will have over most other CRM applications, Herbert said, is that its on-premise, partner-hosted and Microsoft-hosted software is the same, making it easier for companies to switch between deployment models. Companies may start out with a SaaS subscription, for instance, and later migrate to the on-premise edition as their business grows.
Let us know what you think about the story; email: Yuval Shavit, News Writer.
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