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Microsoft preps three ways to sell CRM

VARs will be able to host Microsoft's "Titan" CRM edition themselves, sell customers a version Microsoft will host, or do a traditional installation at a user site.

For some time, customer relationship management (CRM) software has come in two major flavors:

Pick your own CRM
Evaluating Microsoft CRM for an SMB 

Microsoft Dynamics CRM 3.0 vs. 1.0 

On-site products allow companies to integrate CRM into other business operations but can be difficult to deploy. Software delivered as a service, like that from Salesforce.com, integrates less completely, but can be deployed pretty much as simply as bringing up a Web browser.

The next major release of Microsoft Corp.'s Dynamics CRM software, code-named "Titan," is designed to bridge the gap by offering three flavors: an on-site version, a partner-hosted version and a mass-market version – called Microsoft Dynamics Live CRM – hosted by Microsoft itself.

The idea is to have software – and a salesforce – that can reach businesses of all sizes. Microsoft will market the service it hosts itself to small organizations that need minimal customization. Partners hosting their own versions will go after larger companies that need some customization but may not have the infrastructure to bring CRM in-house. The on-site product will be there for companies that need to tie CRM in tightly with the rest of their business.

All three versions of Titan will share the same metadata, allowing customers to easily switch among them. Underlying the new version is a multitenant database that will allow Microsoft's hosting partners more power in customizing the software for certain types of customers, according to Christian Pederson, senior director for Microsoft Dynamics CRM. A multitenant database is one that, like Salesforce.com, allows several customers to use a single database but isolates their data so that it seems to each as if no other data is in residence.

Pederson would say little about whether Microsoft will offer revenue sharing for partners who generate leads for Dynamics Live CRM except that Microsoft will "definitely have incentive programs in place to work with our partners." The new, multitenant backbone will let hosting partners serve more customers with less hardware and without having to resort to virtualizing a server for each client, according to Daniel Bath, owner of coreESP, a Milwaukee-based hosting company.

"We will be able to buy larger hardware – quad-core servers with 64, 128 gigs of RAM – put it against the SAN array and have one piece of equipment to manage, with greater uptime," Bath said.

Most of coreESP's customers are small businesses that require relatively little customization. Bath said Dynamics Live CRM may offer some competition, but it won't affect his bottom line too much, since most of his customers don't use Microsoft's CRM anyway – mostly because of price.

As more companies use software as a service (SaaS) to deliver CRM to smaller customers, companies like coreESP may have to shift more toward training services, Bath said.

Companies whose clients tend to be larger may benefit from leads generated as small companies move from a hosted CRM to an on-site version. Chicago-based Sonoma Partners provides integration for Microsoft CRM but has no plans to offer the hosted version in the future, according to principal Mike Snyder.

"Our guess is [that] smaller companies might start hosted and then go on-premise," Snyder said. And when they do, Sonoma Partners will be there to help them with the integration. "We're looking forward to it very much," he said.

Titan has been released to Microsoft's Technology Adoption Program (TAP), during which partners are able to test a pre-release version. Microsoft expects the final version to be released mid-2007. About 300 companies are currently taking part in the product's TAP, and Microsoft plans to expand that to about 1,000 in the second quarter of 2007.

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