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Microsoft: CRM a "huge opportunity" to drive wider platform sales

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15th Dec 2010
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Microsoft considers CRM to be strategic to the future of its business as both the Cloud and on-premise versions of its software act as a Trojan horse for wider platform and infrastructure sales.

Benoit de la Tour, the software giant’s vice president of business solutions for Europe, the Middle East and Africa, explained the rationale: "Why it’s so important is that CRM applications drive the Microsoft stack, whether on-premise or in the Cloud. The real value proposition is when we combine them with platforms and infrastructure and we’re seeing an increasing number of deals where we can line up the entire value proposition."
De la Tour only joined Microsoft in July from business applications vendor Infor, where he was senior vice president of EMEA. He sees the CRM space as a "huge opportunity", offering an $11 billion available market today, of which the online chunk is currently worth $2.5 billion, doubling in value to a predicted $4.5 billion over the next three years.
While he refused to provide targets for growth or current market share figures, De la Tour indicated that the firm’s CRM business had grown 17% last year compared with flat or slowing growth at two out of the top four players, Oracle and SAP - although he acknowledged that Salesforce.com was still in growth mode.
Cloud CRM for Less
To try and boost sales still further, however, Microsoft plans to extend its six-month-long "Cloud CRM for Less" promotion to the 40 territories outside North America that will have access to its Dynamics CRM Online offering when it is launched in January next year. The on-premise version called Dynamics 2011 is scheduled to follow in the second quarter.
Under the terms of the offer, which will last from the launch date until 11 June, Salesforce.com and Oracle customers with between 150 and 250 seats will be given the local currency equivalent of up to $200 per user off their subscription price. The deal can be used to pay for services such as data migration or application customisation.
De la Tour denied that the scheme was a simply glorified advertising initiative, however, saying that the vendor was already "seeing some traction" in the US.
"We want to acquire new customers to continue our aggressive growth patterns, but we also want to ensure that customers can see real value in the Microsoft offering," he said. "It’s a great way for them to make comparisons, which is why we’re paying for a lead generation campaign quite aggressively to ensure exposure. It costs a lot of money to gain new customers so this is a great way to do it and show value."
Three examples of companies that had already migrated from Salesforce.com were information management systems supplier Data Reduction Systems, printing firm IGH Solutions and office systems provider Smead, de la Tour added.
But he said that, despite trying to model future scenarios, it was very difficult to predict what proportion of the total sales of the new offerings would be cloud or on-premise. Existing interest appeared to indicate that, while large public and private sector organisations wanted a mix "where it makes business sense", small-to-medium businesses were keener on the Cloud option.
However, Microsoft is also keen for its third party channel, which comprises 250,000 partner organisations in Europe, to extend its core CRM offerings out by developing so-called Extended Relationship Management (XRM) applications. These comprise both vertical market packages and software enabling customers to handle relationships with suppliers, partners and staff.
"Sales, customer care and marketing cover 80% of the market at the moment, but we’re seeing a trend for more XRM. So we see CRM increasingly becoming a portal with extended service offerings. Our partners will develop industry solutions and we’ll use our Marketplace to make their solutions available to a wider number of customers," de la Tour said.
The MarketPlace will open its door for business in January along with a portal to enable customers to purchase Dynamics CRM Online.
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