Inside the CRM Wars in the Cloud

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Now that Microsoft has formally rolled out Microsoft Dynamics CRM 2011, the company's customer relationship management (CRM) strategy in the cloud is starting to finally take shape. For example, not only has Microsoft finally fixed troubling issues related to Microsoft Outlook integration, it's also starting to finally mobilize its ecosystem of partners in the cloud.

That ecosystem includes partners such as Avanade, which today rolled out a partner relationship management service on top of its implementation of Microsoft Dynamics CRM 2011. In the next few months, Avanade, a joint venture between Microsoft and Accenture, will also roll out a more enterprise-class version of Microsoft Dynamics CRM that will feature tighter business process integration and social media tools, says Joe Basile, Avanade CRM solution manager.

As Microsoft gets its cloud computing strategy in place, it will stand in sharp contrast to the way Salesforce.com operates. In the case of Salesforce.com, there is only one source for the company's software that runs on a couple of data centers managed by Salesforce.com.


In contrast, Microsoft is building a cloud computing ecosystem where multiple partners will be able to not only deliver Dynamics CRM 2011, but those services can be integrated with Microsoft CRM and other application software running on premise to give customers maximum flexibility.

Of course, Microsoft isn't the only vendor to hit upon this strategy. IBM is cozying up with open source CRM application developer SugarCRM, which, like Microsoft, is developing a CRM ecosystem in the cloud.

What both Microsoft and SugarCRM are trying to highlight is the idea that software-as-a-service (SaaS) as we think about it today is moribund in the age of the cloud. By embracing cloud computing models, Microsoft and SugarCRM are going to let customers run their software on premise or in any data center they choose, as opposed to requiring them to run their CRM software on a data center managed by a software vendor.

In effect, Microsoft and SugarCRM are both talking about decoupling the software from the underlying IT infrastructure while at the same time preserving the whole IT infrastructure-as-a-service concept. In contrast, proponents of SaaS argue that there is still a huge advantage to be derived from having to focus on only one platform and run-time environment.

It will be interesting to see how this war shapes up in 2011. But right now, it looks like both Microsoft and IBM, along with their allies, are moving to isolate Salesforce.com and its Force.com allies in the cloud.