Software as a Service (SaaS)

Microsoft rolls out its Dynamics CRM Online package with prices and options aimed at undercutting software-as-a-service leader Salesforce.com.

By John Pallatto

Playing catch-up in the on-demand customer relationship management market, Microsoft announced the general availability of Microsoft Dynamics CRM Online with aggressive pricing and data storage options that seek to take business away from Salesforce.com.

Dynamics CRM Online is a full suite of on-demand sales, marketing and customer service applications along with business process automation and workflow automation, said Bill Patterson, Microsoft’s director of product management for the online CRM package.

To try to entice Salesforce.com customers to switch to Dynamics CRM Online, Microsoft is undercutting Salesforce.com’s prices and offering more data storage capacity.

Microsoft is offering its on-demand CRM package in two editions. The Professional Edition offers 5GB of data storage, 100 configurable workflows and 100 custom entities at an introductory price of $39 per user per month through the end of 2008. The regular price after that is $44 per user per month. More details on pricing and options are available at Microsoft’s Dynamics CRM Online Web site.

The Professional Plus Edition provides offline data synchronization along with 20GB of data storage, 200 configurable entities and 100 custom entities. This package is priced at $59 per user per month.

In contrast, Salesforce.com’s Professional Edition costs $65 per user per month and provides 1GB of storage.

More than 500 organizations have been using the product for nearly eight months as part of an early release program, Patterson said.

“For some of these businesses this is their first CRM system; for others, they are replacing other CRM investments such as Salesforce.com” and Oracle’s Siebel CRM On Demand package, Patterson said. Interest in the Microsoft product isn’t limited to small and midsize businesses, he said, but departments and divisions within large enterprises are also showing an interest.

Patterson said the average deployment size is about 15 seats per customer but some of the larger sales in the pipeline are averaging about 27 seats per customer.

Microsoft has also been working with about 300 VARs on the product introduction and about 150 ISVs that are building industry vertical applications that run on top of CRM Online or software that integrates CRM Online with other applications.

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Microsoft Prices CRM Online to Undercut Rivals

Analysts say the Salesforce.com deal can’t hide the fact that Google Apps has failed to achieve large-scale deployment in large enterprises.

The announcement of Salesforce for Google Apps has again raised questions about why Google hasn’t been successful in getting major corporations to widely deploy its Web-based productivity applications, particularly the Google Apps Premier Edition.

With the Salesforce for Google Apps announcement, it looks like Google is hoping that Salesforce.com will be able to jump-start the migration of Google Apps into the Enterprise, said Guy Creese, research director with the Burton Group.

In an interview with eWEEK, Creese said the Salesforce.com deal was unlikely to add significant momentum to enterprise adoption of Google Apps.

While the “integration within the Salesforce.com application is quite nice,” Creese said, the Salesforce for Google Apps deal is “an installed base play—non-Salesforce.com customers won’t be touched by this initiative.”

In a blog on the Burton Group site, Creese wrote that Google still faces a tough sell in getting Fortune 500 enterprises to switch from Microsoft Office applications to Google Apps because Google Apps is still missing important features that enterprises want, such as role-based administration, the ability to work offline, records management for documents and automatic footnoting.

Google is working on some of these issues, Creese noted, but their absence means that even corporate users who want access to Google Apps may face opposition from IT and their business managers.

Records management is an important issue to enterprises who always have to be concerned that they may be hit with a lawsuit or a regulatory inquiry that would require them to produce huge volumes of corporate documents, Creese said.

Creese said he believes there are situations where Google Apps could be successful, perhaps in enterprises that need low-cost productivity apps and are “a bit leery of spending all that money on Office.”

The good news, Creese said, is that users get “nice cheap e-mail and a word processor and everything they need to get their jobs done because they aren’t power users.” But the requirement for users like this is, “They must be pretty much self-contained,” he said.

However, Narinder Singh, founder of Appirio, which provides applications and services to support the adoption of both Google Apps and Salesforce.com, claimed that significant number of large corporations have at least launched pilot programs to deploy Google Apps to workgroups of 200 to 1,000 users.

“We have got a bunch of manufacturing and biotech companies” and one large bank that have started major Google Apps deployments, Singh said, but they generally work under strong nondisclosure agreements and “prefer to fly under the radar.”

One of these organizations that has gone public is the Republican National Convention, which is running the organization on Google Apps and is also using Salesforce.com, Singh said.

He said Appirio has also worked with Telecommunications Services of Trinidad and Tobago to deploy Google Apps Premier Edition and to transfer users’ e-mail boxes from an older e-mail system to Gmail.

Singh also noted that biotech company Genentech made a splash early in 2008 when it announced that it was deploying Google Apps across the enterprise. Arthur Levinson, Genentech chairman and CEO, is also on the Google Board of Directors.

Most major enterprises are very shy about publicizing their Google Apps deployments and pilot projects because “they don’t want to cause panic in their own company” with speculation that the company is planning a full-scale deployment of Google Apps, Singh said.

Nor do they want “to find themselves getting pressure from Microsoft if they reveal that they might be considering a large-scale move to Google Apps,” he said.

Will Salesforce Deal Jump-Start Google Apps Adoption?

Partners say Salesforce for Google Apps shows how Web-based software can meet customer needs faster and at much lower cost.

By John Pallatto

Salesforce for Google Apps will be a significant step toward convincing businesses of all sizes to start using on demand business applications, according to two of Salesforce.com partners.

The mashup of Salesforce.com’s customer relationship management software and Google’s Web-based productivity applications “is a great move for a couple of reasons,” said Glen Stoffel, vice president for business development with Bluewolf, an on-demand software deployment consultant.

Bluewolf has been working with Salesforce.com for seven years on on-demand CRM deployment and with Google for more than 18 months since it introduced Google Enterprise.

Salesforce for Google Apps adds “another piece to the puzzle as it relates to people being able to feel that they can effectively operate their businesses in the cloud,” Stoffel said. Furthermore it plays into the core competency of each company, he noted.

Google Apps users get access to the Salesforce.com CRM applications while Salesforce.com users gain close integration with the Google productivity applications Stoffel said. Neither organization has to reinvent the wheel to supply their own equivalent functionality online.

Since Salesforce has already integrated the standard desktop productivity apps like Microsoft Outlook, what it is doing now is offering comparable functionality to the growing section of the world that is trying to do all of their applications or increase the number of applications that they can actually do” on the Web, said Stoffel.

For Appirio, a developer of Web applications for Salesforce and Google, Salesforce for Google Apps provides potentially “endless inspiration” for future Web applications that can tie into these companies’ platforms, said Narinder Singh, one of Appirio’s founders.

Appirio developed four products introduced Monday during Salesforce.com’s roll out of Salesforce for Google Apps. These applications synchronize calendars, let users find and embed documents, collaborate on marketing campaigns, and create and share customized CRM dashboards, said Singh.

Just working with these applications will prompt users to think of new application needs, Singh said.  For example, Appirio first developed the calendar synchronization applications, which can move information between a Salesforce and a Google calendar.

“We were showing that to some marketing people and that led them to say hey that’s interesting, but what I really want to be able to do is I’ve got all these campaigns in Salesforce and I have to copy them by hand into Google calendar,” he said.

So this observation inspired Appirio to take the generic capability of synchronizing calendars and event information and expanding the types of information that could be exchanged between platforms, he said.

“One of the core things for us is the cost of innovation is much smaller so for us to decide we want to move into one of these things and create a micro product that fits the specifics of the user community,” he said. “This is the key difference” between online applications and the typical on premise enterprise application.

Singh is a former SAP executive who worked in the CEO’s office as part of the company’s strategic planning group. At SAP you have to find a software development opportunity that had a potential value of at least $100 million and better yet $1 billion before the company would commit to a major software development cycle.

Building smaller on-demand applications “is a much more nimble approach and gives us a lot more opportunities to find really compelling business products,” he said.

Partners: Salesforce for Google Apps Proves SAAS Versatility

Salesforce.com Achieves Outstanding Customer Satisfaction — Independent research firm CustomerSat finds that 94 percent of Salesforce users surveyed plan to continue using the solution and would recommend it to colleagues.

SAN FRANCISCO, April 2, 2008, 2008 /PRNewswire-FirstCall via COMTEX/ — Salesforce.com (NYSE: CRM), the market and technology leader in Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS), today shared results from customer satisfaction surveys conducted by independent research firm CustomerSat. More than 4100 Salesforce users from around the globe responded to the surveys. Of the respondents, a full 94 percent said they “definitely will” or “probably will” continue to use Salesforce solutions.

“Salesforce.com continues to set an incredibly high standard for customer loyalty, a requirement of our subscription-based Software-as-a-Service model,” said Marc Benioff, chairman and CEO at salesforce.com. “We value the loyalty of our customers and applaud the ROI they have been able to achieve, both of which reflect the tremendous value of our Force.com platform, award-winning applications, and our maniacal commitment to the success of Salesforce users.”

In conducting the July 2007 and February 2008 surveys, CustomerSat received 4165 responses from a random selection of Salesforce users. Along with ongoing use, customers were asked about their likeliness to recommend Salesforce to a colleague and their history of recommending Salesforce. Here also, 94 percent of respondents said they “definitely will” or “probably will” recommend Salesforce. In addition, 74 percent of those surveyed have already recommended salesforce.com to colleagues.

The survey also found that executives are achieving their desired business goals with Salesforce. Of the 1192 executive-level respondents in the sample:

– 90% had improved customer data quality and data management

– 89% improved sales pipeline visibility

– 87% had improved customer service and support

– 78% had reduced sales, service, marketing or other operational costs

– 78% had increased customer satisfaction

– 77% had acquired new customers

– 71% had increased marketing campaign effectiveness

– 71% had increased customer retention

– 71% had enhanced cross-sell and up-sell opportunities

– 70% had increased sales revenue

In addition to achieving their business goals, the survey specifically asked executives to quantify the impact of Salesforce upon productivity and profitability. On average, Salesforce delivered:

– 43% increase in sales productivity

– 41% increase in sales revenues

– 29% increase in profit margin

– 25% increase in win rate

The ease of use of the Salesforce service continues to be the main reason why executives choose salesforce.com. It’s also a key driver of customer satisfaction, along with related attributes such as interface consistency, interface readability, ease of learning, and ease of training new users. The reliability of the Salesforce service is the number one driver of customer satisfaction. The remaining top 10 drivers of customer satisfaction with the Salesforce service are breadth and depth of features; performance and speed; and ease of administration. (continued to pg 2…)

CRM Daily | Salesforce.com Achieves Outstanding Customer Satisfaction

By Peter Piazza

Microsoft is directly challenging Salesforce.com with its new hosted CRM service, which is in beta testing now and should be launched for general sign-up in the middle of this year. All indications are that Microsoft will launch a full-scale attack, with extremely aggressive pricing: Salesforce.com’s similar offerings cost about 50 percent more.

Microsoft offered a sneak peek of the newest version of its CRM application, Dynamics AX 2009, at Convergence 2008, a meeting of Microsoft Dynamics users. The release, due in the first half of this year, is aimed at small and midsize businesses with what analysts say is extremely aggressive pricing.

One major focus of the new release is managing compliance obligations, providing what Microsoft calls a “one-stop shop for compliance-related information.” AX 2009 also includes enhanced global capabilities (such as multiple language support) that will give international businesses real-time visibility into operations such as overseas inventory of global locations.

Chris Alliegro, lead analyst with Directions on Microsoft (an independent research firm focused exclusively on Microsoft strategy and technology), said that Dynamics offers a big advantage over competing products: a familiar interface. “If you’re a Microsoft shop, it’s an interface you’re already familiar with. Having your CRM functionality visible, accessible, and built into Outlook is a huge selling point for Microsoft.”

Salesforce.com: The One To Beat

Alliegro told us that Microsoft is directly challenging Salesforce.com with its new hosted CRM service, which is in beta testing now and should be launched for general sign-up in the middle of this year. All indications are that Microsoft will launch a full-scale attack.

“They’re coming at the market very aggressively,” particularly in terms of pricing, Alliegro said. One version of the hosted product is expected to be $44 per month per subscriber, and $15 higher for the more enhanced version. (The main differences between the two versions, he said, are storage amount and the ability to support offline synchronizations.) He said that Salesforce.com’s similar offerings cost about 50 percent more.

“It’s fair to ask if Microsoft can even make money at that price point. That’s something they’re going to learn. I think that companies getting into this kind of business are caught off-guard by how small the margins actually are — it’s a much smaller-margin business than selling packaged software,” Alliegro said.

But Microsoft has both the deep pockets and the staying power needed to compete. “Microsoft is the kind of company that has proved that if it believes in something, it’s willing to lose money on it for a long time to win the market, and they’re a company that’s as well positioned as any company to operate in that kind of environment,” Alliegro said.

The Future of xRM

Alliegro noted that Microsoft has been talking up the idea of “xRM,” where its CRM platform can have far more uses than simply managing sales, customer service and marketing. “It’s also a generic platform that can be tailored to a wide range of functions or applications that are managing relations,” Alliegro said. For example, the U.S. Air Force used the platform to build an application to help them manage personnel deployment — which is not a customer-service application.

Microsoft will be looking hard at ways to exploit xRM and find other uses — and customers — for it. “They haven’t said anything about what that functionality might be, but they hinted that they’re thinking about that. If Microsoft starts to work through the feature specs of the next version, it wouldn’t surprise me to see other functional domain areas surfacing, where they’re taking this product and trying to make it specific to some applications other than strictly CRM.”

CRM Daily | Microsoft CRM Takes on Salesforce.com