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CRM services partners and Google target Microsoft now features Google Apps, and some partners think it will help them lure away Microsoft customers.

The customer relationship management (CRM) services market battle is heating up with this week's news that and Google have expanded their partnership. will integrate Google Apps with its own online CRM services. The move will allow customers to seamlessly move data from their business applications to the GMail email service, word processing and spreadsheets with Google Docs and the online Google Calendar.

Microsoft has promised similar functionality with Dynamics CRM Online (formerly called Dynamics CRM Live) -- a hosted version of its Dynamics CRM software that will integrate with Microsoft Office and Outlook. But that CRM service is not expected until June.

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"Google and Salesforce were born in the Web 2.0 world," said Len Couture, the CIO practice managing director for Bluewolf, a partner in New York. "Microsoft's got a big challenge to get their ship turned."

The Software as a Service (SaaS) approach championed by Google and represents a "cultural shift" in the enterprise market and brings some "unique challenges" to the channel, said Bob Laliberte, an analyst with Enterprise Strategy Group in Milford, Mass.

"For consumers and younger generations, the SaaS model is very natural," he said via email. "Applications like Facebook, YouTube, etc. have been conditioned to leverage online applications. But businesses, especially brick-and-mortar businesses, are much more conservative and react more cautiously to change -- especially when that means that one of a business's most import assets, its information, is not under their control."

Microsoft Outlook has been integrated with for years, so "this is not cutting-edge stuff," Laliberte said. But it will offer an Outlook alternative to users, he said.

Google Apps have a lower total cost of ownership (TCO) than Microsoft Office and Outlook, said Narinder Singh, co-founder of Appirio Inc., a partner in San Francisco. Those cost savings and this new integration with's CRM services will help Google take enterprise customers away from Redmond, he said.

"A lot of these large enterprises are starting to look at and explore Google applications," he added. "They'll cause Microsoft to take action."

Solution providers that sell CRM services are always at risk of losing customers, because the monthly subscription payments don't lock customers into long-term agreements, Laliberte said. Partners can keep customers loyal by customizing the CRM services, which often commands a "significant investment," he said.

The new integration with Google Apps gives more CRM service opportunities, Singh said. His company has already released four applications that take advantage of the integration. One, for example, exports marketing information from into Google Calendar to help users keep track of campaigns. Another lets users export data into Google Gadgets that can be displayed on desktops, websites or elsewhere.

"We're really excited about the notion of connecting business systems to personal productivity tools," Singh said.

CRM services are just one area where SaaS is growing. Others include online backup services and development platforms, such as Amazon Web Services and the new Google App Engine.

"The SaaS model is gaining more momentum and … creating a lot of opportunities for the channel to bring new products to their customers," Laliberte said.

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