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Chuck Schaeffer Microsoft + Salesforce.com = BFF?

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 By on May 29, 2014

A Press Conference Partnership

There’s lots of chatter about today’s partnership announcement by Microsoft and Salesforce.com. From my perspective the announcement itself is yawn-worthy, but looking a bit deeper it does show strong signs in how the CRM software industry is evolving, and how the competitive landscape is clearly changing.

The Partnership Announcement

The substance of the announcement is that Salesforce.com will integrate its platform and applications to Microsoft Office, Office 365 and Windows; Salesforce ExactTarget will continue to run on SQL Server and possibly Azure; and Salesforce1 will support Windows 8 and Windows Phone 8.1 later this year, at least in a preview mode.

At first blush it may appear that Microsoft is the beneficiary of this announcement. But in reality, despite Salesforce’s meteoric rise and unmatched CRM market share, failing to support the Microsoft platform products firmly entrenched among their common customers was far more troublesome to Salesforce than Microsoft.

Salesforce.com’s early bet on Google Apps was a loser and their Outlook integration has always been subpar. This announcement shows they will remedy these weaknesses, and come out much stronger for it.

What About Microsoft Dynamics CRM?

Dynamics CRM is a crown jewel in the Microsoft Dynamics portfolio, and the company looks to accelerate an already impressive growth run. The Dynamics CRM 2013 release brought a new user experience, enhanced mobility and a slew of platform capabilities delivered at an unmatched price point. Among the five Dynamics product lines (AX, NAV, GP, SL and CRM), CRM has been and will continue to be the clear and away revenue and market share accelerator for Microsoft.

With Oracle showing signs of CRM confusion (i.e. CRM versus CX and rationalizing a number of CRM products) and SAP CRM on the decline, many industry pundits believe Microsoft CRM is the top contender to challenge Salesforce.com for market leadership.

So it may have come as a surprise for Microsoft insiders, partners and customers to hear Microsoft's newest CEO, Satya Nadella, announce "We are bringing the leading CRM application to Windows devices, both phones and PCs", and then recognize he was talking about Salesforce.com, not Dynamics CRM.

Veteran Microsoft commentator Mary Jo Foley shared the awkwardness felt by insiders stating "A new partnership between rivals Microsoft and Salesforce.com has left some Microsoft Dynamics CRM customers and partners wondering about the future of Microsoft's own CRM offering."

Put more bluntly by Nucleus Research, "[Satya] let Marc throw Dynamics under the bus during this announcement by emphasizing that apps, and specifically CRM, are Salesforce's core business while Windows and Office are Microsoft's jewels. This shows Satya can't handle a press conference, doesn't know enough about Microsoft Dynamics and the competitive marketplace, or simply doesn't care about Dynamics."

IDG’s CIO magazine gave more of a middle ground commentary, noting that Nadella was asked about the indifference being implied to Dynamics CRM, deflected the question, and then summarized "The comment implied Microsoft wants to use the partnership to build up the Windows and Office franchises even if it doesn't benefit Dynamics CRM."

Winners and Losers

The most significant news came in what wasn't said in the announcement.

It appears Salesforce.com is abandoning Google Apps for Office 365. No surprise here.

There was some suggestion that Salesforce.com may be hedging its cloud bet with Amazon's AWS but my calls to some Salesforce execs tell me that is not the case, and Salesforce has no plans to put its CRM platform or apps or Azure.

Many pundits suggest that this announcement shows that the honeymoon between Larry Ellison and Marc Benioff is over. I disagree. Benioff's too smart for that. I believe he's keeping his options open, and keeping both Oracle and Microsoft vying for his lucrative customer base and future M&A discussion. If Salesforce.com is going to be acquired over the next five years (which I firmly believe they will be), the top three suitors are Oracle, IBM and Microsoft. Best to seed these relationships early and create a competitive bid environment.

Once you redact the corporate marketing buzzwords and phrases like "global, strategic partnership" that was used more times than I counted, you recognize that this announcement is just about integrating wares between two big technology companies. Something that had to be done anyway, but seemingly escalated to a press event because there's a void for real innovation or at least an absence of something more significant to talk about. End

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With Oracle showing signs of CRM confusion and SAP CRM on the decline, many industry pundits believe Microsoft CRM is the top contender to challenge Salesforce.com for market leadership.

 

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