Microsoft Stops the Nibbling

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It has been quite a week for CRM. The Non-Disclosure Agreement has been lifted on the Dynamic CRM Spring Release which means lots of blogs and tweets on what we can expect in the next couple of weeks or, if you are using Dynamics CRM Online, what you already may have.

Also, in case you have not seen it, Satya Nadella (the new Ballmer) and Marc Benioff have signed an agreement to play nicely. What does this mean for us folk in the Dynamics CRM space? What does it mean for Microsoft? Does this mean Marc will no longer be calling Microsoft bad names? Here are my thoughts.

The Partnership

The details from the press release are:

  • Salesforce1 (the app development platform for Salesforce) will play nicely with Windows and Windows Phone
  • Better integration with Office 365
    • Collaborate on Office content (Word documents, PowerPoints, Excel spreadsheets etc.) from within Salesforce and Salesforce1 apps
    • Use OneDrive and SharePoint as storage options for Salesforce
    • Better integration between Salesforce and Outlook
    • Connect Salesforce to Power BI

The Windows Operating System

Apple machines are making in-roads into the most traditional of offices. They are now mainstream. They even exist in my CRM team at Oakton. Even amongst the CRM MVPs, pre-Surface, there were increasing numbers of the thin boxes with the glowing fruit on the back. For the MVPs, I believe the Surface has reversed this trend (I plan to do a blog on this at some stage but I digress) but there are still many in the wild that prefer to fly through Air than to glide on the Surface.

Similarly, amongst consumers Android and iDevices are ubiquitous. The household without one (like mine) seems to be the exception, rather than the rule.

So how does this deal affect Windows? Salesforce1 will play nicely with it. So, for enterprises building apps on Salesforce1, a Windows-based tablet is now an option whereas before the Apple/Android alternative may have been necessary ‘evil’ for a roll-out. With Apple devices being the more expensive, cheap Android slates would be a good bet.

However, at Build 2014, Microsoft announced Windows devices under nine inches in size are royalty free. For Android devices, manufacturers pay royalties to Microsoft because of certain patents held, to the tune of $10-15 per device. So, in theory, a manufacturer could make a sub-nine inch device for less using the Windows or Windows Phone operating system than using the Android operating system.

Assuming, at worst, Windows devices come out at a similar price to Android slates, Windows is now an option for the enterprise rolling out Salesforce1 apps. Given the Windows operating system is familiar to the internal IT support crew, this potentially stops Google and Apple getting their foot in the door into what would otherwise be a ‘Microsoft shop’.

Windows Phone

It may come as no surprise that I have a Windows Phone (a Lumia 925 to be precise), now my second Lumia phone. While I love the phone and the Windows Phone operating system (it trained me on how to use Windows 8 even before Windows 8 was released), there is a BIG problem with Windows Phones which is the app ecosystem.

There is no question the apps which are available give me everything I need. However, the number of times I see a retail organisation advertise an app which is available on Apple and Android but NOT Windows Phone drives me nuts.

While, in the consumer market, things are unlikely to change any time soon (unless Microsoft develop their own version of an Android emulator for Windows and release it as a standard part of their devices), for business apps developed on Salesforce1 this now encourages the rollout of Windows Phones for similar reasons as above for Windows slates i.e. internal familiarity, cost.

Microsoft Office

From my interactions with clients it seems Office 365 is gaining traction. Customers, more and more, speak of ‘Office 365’, rather than ‘Office’. Google apps is still out there in smaller organisations and, while I have not used it extensively, it seems to be a pale imitation which people put up with or tolerate out of defiance rather than out of any functional superiority. Similarly with other products like OpenOffice; it is a product which is Office-like but not a superior, compelling alternative.

In making it easier for Salesforce to work with Office content in Salesforce and Salesforce1, Microsoft again stops Google and others getting a foot in the door. It is conceivable that, in the past, if a small part of the business was using a Salesforce cloud product or a Salesforce1 app, with the choice of an awkward integration with Microsoft Office or a simpler integration with Google apps, the latter would be chosen. The new deal means such a concession is no longer needed.

OneDrive and SharePoint

There are so many cloud storage options out there. Google have the Google Drive and there is always the hipster’s favourite, DropBox. What does the discerning enterprise pick to compliment their cloud app system? For any organisation with an Office 365 subscription (giving them OneDrive) or an Enterprise Agreement with Microsoft (which inevitably includes SharePoint) it is now a no-brainer. The new deal shores up the defences against the onslaught of other cloud storage options.

Dynamics CRM

The last two parts of the deal (Outlook and Power BI), within themselves are not a big deal but, from a Dynamics CRM perspective, hurt a lot.

Outlook has never been a focus for Salesforce; they simply do not care. I was recently speaking to a friend of mine who works at Salesforce and he summed it up well. Salesforce see email as a channel to feed into their Salesforce applications so the only integration they desire is to make it easy for Outlook users to pass emails into, say, the Sales Cloud. Running a full-blown version of Salesforce within Outlook is irrelevant and not part of their cloud-first paradigm. For Microsoft, Outlook is where business lives so it makes sense to run Dynamics CRM, as much as possible, from within it. For businesses which do not live in Outlook, there is the web client and mobile apps.

However, when asked what are the main differences between Salesforce and Dynamics CRM, I cite the following areas:

  • Cost (Dynamics CRM is consistently cheaper than the Sales/Marketing/Support cloud equivalent offerings)
  • Better Outlook integration (if you work out of Outlook, Dynamics CRM simply works better)
  • Better integration with Microsoft Office
  • Better integration with the Microsoft ‘stack’ (Active Directory, Exchange, SQL Server etc.)
  • Deployment options (on-premise, hosted or cloud)
  • (more recently) The awesome power that Excel’s BI tools bring to CRM, especially with the Leo/Spring Release

The Microsoft/Salesforce arrangement erode three of these points (Outlook, Office and Power BI).

For Enterprise Agreements this is not a big deal. Microsoft will simply bundle in Dynamics CRM at a competitive rate. Similarly for organisations with Office 365, getting Dynamics CRM is as simple as ticking a box. However, for Microsoft partners, competing on a direct sale against Salesforce, things have become a little tougher. Perhaps Microsoft partners will need to compete on something other than the product, like great customer service, industry acumen and a focus on the customers’ strategic goals. For a company like Oakton which is a Microsoft AND Salesforce partner, the balance has shifted slightly but, in the big picture, little has changed.

Conclusions

The partnership is not about Salesforce and certainly not about Dynamics CRM, it is all about how Salesforce enables other competitors like Google and Apple to nibble away at Microsoft’s market share in a range of other areas which provide a lot of revenue to the Microsoft bottom line. By ‘making friends’ with Marc, Satya strengthens the walls around Microsoft core products like Windows and Office and gives their cloud/mobile offerings like Office 365, OneDrive and Windows Phone a fighting chance of getting a piece of the customer pie.

The cost to Microsoft comes in partner-direct sales of Dynamics CRM but, given Dynamics CRM is a ‘rounding error’ on the Microsoft revenue general ledger, and partner-direct sales are a fraction of this small fraction, I can see the logic (as a CRM MVP it does not mean I have to like it though). To survive, Microsoft partners will either broaden their offering to include Salesforce, focus more on consulting services than direct sales or become more customer-focussed and provide value to clients beyond the product.

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7 thoughts on “Microsoft Stops the Nibbling

  1. I haven't listened to the love-in between Satya and Marc but here is the transcript (http://www.microsoft.com/en-us/news/speeches/2014/05-29microsoftsalesforce.aspx). What I see is Satya admitting Microsoft uses Exact Target sometimes and will continue to for now and Marc admitting he uses Azure sometimes.

    Once Dynamics Marketing is mature I am sure Microsoft will drop Exact Target like a hot coal. Microsoft has dropped serious coin on Marketing Pilot so I doubt this partnership will change their plans on its future.

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  2. I deploy CRM to small businesses, usually leading with Dynamics but sometimes choosing salesforce. For most small businesses Dynamics is a much better value and customers really like the latest interface.

    I got a sinking feeling about Dynamics when I first read the news because the death of ResponsePoint, a nice simple phone system Microsoft developed for small business, began it's death spiral with a puzzling announcement.

    How about Office 365 integration for Dynamics CRM? I mean functional as in being able to “Set Regarding” from Outlook Web.

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  3. Hi Doug,

    With server side integration of Exchange and CRM, the 'Set Regarding' in OWA should be technically achievable but I do not believe it is there yet.

    I know nothing official or otherwise but I imagine it will be available in the future.

    Leon

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  4. I agree that making the OWA CRM integration is something that many CRM users would love. I have Heard this request many times.

    From what I have also Heard, the API:s for OWA do not support making this kind of integration currently. Let's hope they are enhanced to that this can be enabled.

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