Microsoft CRM Online: not so sharp

Microsoft CRM Online: not so sharp

Summary: At least Microsoft has finally admitted that software has to be completely rearchitected before it can be offered as a service. But even if CRM Online, released today, has the right architecture, Microsoft's on-demand business model remains seriously flawed.

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Let me start off by offering grudging congratulations to Microsoft, which took the wraps off CRM Online today, for finally acknowledging that it has to totally re-architect its software to be able to offer it on demand. Tim O'Brien, senior director of platform strategy for Microsoft, spelt it out in a media briefing today:

Dynamics CRM is the first product that Microsoft has rearchitected for multitenancy, and to do so, the company had to fully rewrite the program, he said.

"We're not as far down the path of rearchitecting on the Exchange and SharePoint side, but that is directionally the way we're headed," he said. "We have a huge portfolio of applications that we'll over time take in this direction."

Rearchitecting for multitenancy includes the following key actions, he explained:

  • Making sure it can support millions of users rather than stopping at the tens of thousands typically expected at the high end of enterprise software.
  • Partitioning user content so customers can't access each other's data.
  • Supporting high levels of client-side configuration so that individual users can design user interfaces or presentation skins to suit them.
  • Ensuring that one customer running high usage or a bad query can't take down the system for everyone else.

This much is good, and of course Microsoft has the market presence to make some headway with CRM Online. But I can't agree with Josh Greenbaum's assertion last week that the product is going to be a big challenge for Salesforce.com this year [disclosure: Salesforce.com is a client].

For one thing, the assertion that CRM Online is a winner because customers can choose between hosted and on-premise doesn't strike true to me. According to Tim O'Brien, quoted above, the software is optimized for multi-tenancy — so installing it on-premise is presumably sub-optimal. That doesn't sound like a level choice to me.

But what really lets the product down I think is this notion that the integration to Office and other on-premise Microsoft products will make it a winner. This really exposes everything that's wrong with the software-plus-services strategy, in which software delivered as a service remains subservient to old-fashioned on-premise server products. Microsoft's supposedly low-cost pricing for CRM Online doesn't really undercut Salesforce.com when you factor in all the integration servers you have to buy, install and maintain to get your desktop and on-premise apps working with the online services.

I think customers are pretty wise to this, and if they're already committed to the Microsoft infrastructure, then maybe CRM Online won't look too expensive. But Microsoft isn't going to steal customers from Salesforce.com with this strategy. It's a bit like the old razor and blades business model, except that it's the wrong way round. Microsoft is selling the razor blades cheap so that it can make money on the razors. But why would anyone want to buy those razors unless they were locked in to doing so?

Topics: Enterprise Software, Microsoft, Software

Phil Wainewright

About Phil Wainewright

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant.

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3 comments
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  • Disclosure?

    [i]But I can?t agree with Josh Greenbaum?s assertion last week that the product is going to be a big challenge for Salesforce.com this year [disclosure: Salesforce.com is a client].[/i]

    I'm afraid your whole post is compromised. What is the value of your opinion of your client's competitor? Absolutely worthless, I'm afraid.
    tonymcs1
    • A Microsoft product not so sharp?

      who'da thought?
      fr0thy2
  • You can't be serious

    [i]For one thing, the assertion that CRM Online is a winner because customers can choose between hosted and on-premise doesn???t strike true to me. According to Tim O???Brien, quoted above, the software is optimized for multi-tenancy ??? so installing it on-premise is presumably sub-optimal. That doesn???t sound like a level choice to me.[/i]

    Has it ever occurred to you that the software has been optimized to run both multitenancy and on-premise? Do you think MS developers said, "Let's optimize this on-premise software to run multitenancy." Then afterwards they smacked their heads and said, "Oh no! What have we done!"

    [i]But what really lets the product down I think is this notion that the integration to Office and other on-premise Microsoft products will make it a winner.[/i]

    So then you are saying that it is a bad idea to have customers interact with their data using a rich, responsive, flexible interface. It is much better for them to interact with their data using a browser - a platform that was never originally designed for application development, and does a relatively poor job doing so.


    [i]But what really lets the product down I think is this notion that the integration to Office and other on-premise Microsoft products will make it a winner. This really exposes everything that???s wrong with the software-plus-services strategy, in which software delivered as a service remains subservient to old-fashioned on-premise server products. Microsoft???s supposedly low-cost pricing for CRM Online doesn???t really undercut Salesforce.com when you factor in all the integration servers you have to buy, install and maintain to get your desktop and on-premise apps working with the online services.[/i]

    Where does it say that MS CRM Online requires various other Windows sever software installed on premise, in order to be used? [url=http://tinyurl.com/5y9dd7]All MS CRM Online requires is a browser, MS Office, and an Internet connection[/url]. Now it is true that CRM Online may be complemented with additional functionality via additional Windows sever software that are run on-premise; but here you are comparing apples to oranges. In the first case, you have a solution that more directly compares with Salesforce.com, and in the second case, you have a situation where you can mix and match a range of server functionality, that can be flexibly configured - where the configurations include the use of both on-premise and multitenancy software.

    [i]I think customers are pretty wise to this, and if they???re already committed to the Microsoft infrastructure, then maybe CRM Online won???t look too expensive. But Microsoft isn???t going to steal customers from Salesforce.com with this strategy. It???s a bit like the old razor and blades business model, except that it???s the wrong way round. Microsoft is selling the razor blades cheap so that it can make money on the razors. But why would anyone want to buy those razors unless they were locked in to doing so?[/i]

    As I indicated before, you are comparing apples to oranges. Also, it seems to me that MS is trying to make money selling both razors and razor blades. Do you realize in the razor market, companies make money from selling (electric, battery powered, and regular) razors - in addition to selling razor blades? Also, do you also realize in the transportation sector, there is a rich ecosystem of various forms of mass transit, privately owned fleets of vehicles, and privately owned vehicles? There is no reason for believing that all computing will move to the cloud, and I see no reason for faulting MS for attempting to sell software in the various forms people would like to purchase them.
    P. Douglas