MS WPC - Microsoft to take Dynamics CRM Live in Q2 2007

CRM will be the third hosted Live service Microsoft plans to provide next year following its Windows Live and Office Live software-as-a-service offerings.

Microsoft's Dynamics CRM (customer relationship management) product will become its third Live hosted service, following in the footsteps of its Windows Live and Office Live software-as-a-service offerings, the company announced Tuesday.

Microsoft plans to introduce CRM Live in the second quarter of 2007, initially only in North America, said Brad Wilson, general manager for Microsoft Dynamics CRM. The company won't limit the number of users that CRM Live can support, although at first it will be aimed at small businesses, typically those with 8 to 10 seats. The service initially will be operated and managed from within Microsoft's own data centers.

Going forward, customers will have three deployment options -- they can choose CRM Live hosted by Microsoft, CRM hosted by Microsoft partners, or run the software themselves in their own premises. All three versions of CRM will have the same code base, so customers will be able to switch between the different deployment models as suits their needs, Wilson said.

Steve Ballmer, Microsoft's chief executive officer, was expected to highlight Dynamics CRM Live in a speech at the start of the company's Worldwide Partner Conference in Boston, which runs Tuesday through Thursday.

"There is still a fairly large, untapped market for CRM in very small business, so Microsoft is wise to target this segment with a hosted product," said Rob Bois, research director at AMR Research. "At this point, the Microsoft partner network is more oriented towards the small and midsize business (SMB) segment, so this doesn't really disintermediate them."

CRM Live will help Microsoft better compete in the SMB space with pure-play SaaS (software-as-a-service) vendors like Salesforce.com Inc., said Liz Herbert, a senior analyst at Forrester Research. The service may also attract divisions of large enterprises whose needs aren't being fully met by corporate applications.

Unlike its partners who host the CRM service, Microsoft won't allow CRM Live users to run third-party server-side code in its data centers, since Microsoft lacks a good way of carrying out quality assurance on such applications, Wilson said.

Microsoft has yet to set a price for the monthly user subscription it will charge for CRM Live. The vendor has started signing up partners for an early access program planned for the fourth quarter. In the first quarter of 2007 it will widen the initiative into a customer beta program.

The vendor has seen "huge momentum" for its CRM software over the past year, Wilson said. He wouldn't be surprised if CRM became Microsoft's next US$1 billion business, he said. To date, the company has more than 7,500 CRM customer accounts and over 250,000 users.

Microsoft is stressing the range of its CRM software, spanning deals for five users up to 5,000-plus seat contracts. The vendor is coming up with more choices for how users access, use and deploy CRM, Wilson said.

In August, Microsoft plans to provide an open-source thin CRM client for mobile devices. The thin client will enable users to access any of their Dynamics CRM functionality from their mobile devices. "We even had someone testing the client on a PlayStation Portable," Wilson said.

Within Microsoft, which uses Siebel CRM software, the company expects to have 1,000 staff using Dynamics CRM by year-end. "We absolutely expect [our] CRM to replace Siebel within Microsoft," Wilson said, though he declined to say when the migration might occur.

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