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Microsoft Talks CRM, Benioff Laughs Heartily

David A. Utter
Staff Writer
Published: 2006-07-11

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All that CRM momentum Microsoft has been touting for the forthcoming software-as-a-service CRM Live elicited a chuckle and a "Microsoft is being out hustled by everyone" comment from Salesforce.com CEO Marc Benioff.

Microsoft (MSFT) announced its CRM Live product, part of the Microsoft Dynamics family, at a Worldwide Partners Conference 2006 in Boston today. Three-thousand miles away in San Francisco, mailing list recipients at Salesforce.com (CRM) joined in Benioff's speculation about the future: "Is this the end of software as we know it?"

Benioff seems to feel fine about the future. So does Microsoft, which brought out CRM Live in friendly surroundings. "We believe in the power of software plus services, and today's introduction of Microsoft Dynamics CRM Live is another example of our delivering against that vision," said Jeff Raikes, president of the Microsoft Business Division at Microsoft.

"Microsoft CRM Live will provide a software-as-a-service option for deploying our leading CRM solution and will also afford partners new opportunities to deliver their value-added services."

Software-as-a-service (SaaS) has been a concept occupying Benioff and Salesforce, especially since they launched AppExchange in January of this year. Benioff talked more about SaaS in his email:

The world has changed. Everyone and everything is becoming a service.

It was not so long ago that most executives and companies disregarded the movement to software as service, claiming it was limited technically, or isolated to a specific market segment such as small business. Now, everyone agrees that the future of software is no software at all---but rather an industry dominated by tens of thousands of heterogeneous services delivering everything from traditional Office productivity to Verticals to VOIP to ERP and CRM systems.

Benioff called this "the Business Web. And The Business Web-- with all of its innovation, creativity, and most important, customer success-won't wait for Microsoft."

Microsoft is not waiting either. Ray Ozzie has taken over for Bill Gates as chief software architect at the company. That means Microsoft has a shift under way to SaaS as well, with Ozzie plotting that new course.

The mobile sector will have an open source client available in August from Microsoft to connect with the company's CRM products; however, CRM Live will not arrive until the second quarter of 2007.

Benioff sees the various SaaS offerings that compete directly with Microsoft, like hosted email servers from Google and Yahoo, and online productivity alternatives to Office like Writely, NumSum, and Google Spreadsheets. He could have mentioned Yahoo's Mail Beta as well; it's virtually a clone of Microsoft Outlook.

We aren't entirely convinced the online competitors to Word and Excel pose a serious threat to Office yet. File format compatibility isn't the same as having comparable feature sets. Criticisms of bloat in Office can probably be countered by someone, somewhere, who asked for a particular feature somewhere during Office's development lifetime.

That doesn't minimize the importance of SaaS. Microsoft thinks it's important enough to redirect resources to it, even in the face of criticism that it takes the company away from its core revenue streams of Office and Windows.

If Benioff is right, SaaS is even more important than Microsoft believes:

It will not be dominated by any one particular company or application or geography. The reason is that The Business Web will be best known for its ability to easily create composite applications, or what is now popularly known as "mash-ups."

No one can turn back time, and the Pandora's box of services is now opened.  New companies being funded on Sand Hill Road are not software companies but services companies.  And, entrepreneurs around the world are starting their own companies to take on this great new opportunity of creating The Business Web.

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About the Author:
David Utter is a staff writer for WebProNews covering technology and business.

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