With the announcement at its worldwide partner conference of CRM Live, Microsoft is taking another step deeper into directly hosting applications. However, CEO Steve Ballmer and other company officials said it’s not a step partners should be afraid of.
“It gives you and us both new challenges, maybe, but much more in the way of new opportunities,” Ballmer told some 7,000 partners yesterday gathered in Boston for this week’s annual conference.
CRM Live puts Microsoft on a direct collision course with hosted offerings from Oracle (via its acquisition of Siebel) and Salesforce.com. To be launched in Canada and the U.S. in the second quarter of next year after a beta test early next year, CRM Live customers will pay for the service at monthly subscription rates Microsoft isn’t releasing yet.
But the company emphasized that unlike competitors, it is making its company-hosted product channel-friendly. Partners will be paid a yet-to-be announced finders fee for referring customers to Microsoft. Because the software code is identical to the packaged version of Dynamics CRM sold by VARs, customers will be able to easily migrate from company (or partner) hosted versions to a licenced version of their own. Ballmer also noted that partners can customize CRM Live if customers want.
In an interview, Frank Falcone, CRM product manager for Microsoft Canada, said those who want customization will likely opt for a partner-hosted version of CRM. Falcone also stressed the company will aim CRM Live at organizations with up to 15 employees. “Partners don’t go after deals of that size,” he said. As evidence of its intent, he said Microsoft will be aiming sales and marketing material at those small firms.
However, he acknowledged that Microsoft isn’t putting a firm cap limiting its sales force from selling only to such small companies.
CRM Live joins Windows Live OneCare, a set of online security services largely aimed at consumers. Its no surprise Microsoft is going deeper into delivering software itself, with chairman Bill Gates having told employees last October it will move in that direction. There’s an Office Live beta test now in progress, and Ballmer said yesterday that 20 new Live services will be introduced by the fall.
But perhaps in a bid to reassure partners, Ballmer announced yesterday the formation of a Live Partner Advisory Council on its online delivery strategy. “We don’t see this as a world in which we do everything ourselves,” he told the audience. “There are going to be services we host, and services you host. There are going to be services that get sold by you on a commission basis. There is going to be value add that you deliver in system integration and application development around these hosted services.”
“I don’t think most of you should expect any major impact plus or minus from Live to the core of the business that we do together in the next year,” he added, “but as now is the time to build out the platform, now is also the time for us to come together and define the business model and the way we work together.
The announcement was one of several initiatives announced on the opening day to whet the appetite of partners looking at the companies strategies for the next 12 months.
In addition to reminding the audience that coming shortly are Office 12, Internet Explorer 7 and Windows Vista, Ballmer announced Windows Small Business Server R2 and new pricing for it, unified messaging for Exchange 2007, an increased effort in enterprise search and a radically new pricing system for the Dynamics family of enterprise resource planning applications.
The Business Ready Licencing for Dynamics AX, GP, NAV and SL abandons the complicated pricing scheme based on add-on modules, an approach which even Nancy Teixeria, ERP product manager for Microsoft Canada, described as having “hundreds of thousands of permutations.”
The four products, which are aimed at different markets, will be sold in three versions.
The Essentials Edition will be packaged as an entry-level bundle of features with financial, distribution and reporting functions; the Advanced Management Edition will be for companies needing deeper functionality, including job or project costing; while the Advanced Management Enterprise version will be for organizations with complex needs who will be able to buy extra modules to the Advanced Management version.
Although they are different products, Teixeria said Microsoft has tried to make the feature set of each edition as similar as possible.
Pricing for the three editions will be based on the number of seats and will be identical for all but Dynamics AX, which because of its complexity and feature set commands a premium. For example, the Essentials version of Dynamics GP, NAV and SL will cost $3,105 for up to 10 users. Dynamics AX Essentials will cost $3,580 for up to 10 users. Pricing drops as the number of users increases.
“It’s all about simplification and delivering a model that’s easier for partners to sell and for customers to buy,” said Teixeria.
The new pricing starts Aug. 1, although new customers will have up until Oct. 13 to decide which pricing scheme they will adopt. However, existing Dynamics customers won’t be forced to switch to the new pricing.
For small companies with up to 10 users the new pricing scheme would “likely be a price decrease,” said Teixeria. However, she acknowleged that it will end up being a price increase for organizations with 50 seats or more.
The new pricing should make the Dynamics family even more competitive against offerings from SAP and Oracle, Teixeria said. In addition, there are changes to the Dynamics Enhancement Plan for maintenance, which in Canada means customers can get free online training.
The changes are also meant to reassure existing and potential customers looking at Microsoft’s plans to merge the four ERP products into one, which Teixeria said is targeted at “2009-plus.”
“As long as you’re on the Enhancement Plan you will not have to repurchase functionality when the converged product is released,” she said.
Finally, it wouldn’t be a partners conference without management trumpting the heart of its franchise. Ballmer promised Microsoft will put a “massive effort” into the upcoming launches of Office 2007, Windows Vista and Internet Explorer 7.
“I was backstage talking to some of our folks and they were saying partners aren’t going to care about the consumer launch, they care about the business value, and I said, ‘No, no, you’re all wrong.’ If we have a strong consumer launch, it creates the air cover where people are coming in and saying I want this stuff at work. And that air cover is incredibly important to our IT customers and to our business partners. So this will get massive investment from us, both at the consumer level, as well as at the business level.
”So it’s an amazing year, and Vista and Office 2007 are kind of the linchpins. We’ll have big launches for these products around the turn of the year. Both of these products are incredibly important, and both of these will be incredibly important to all of our partners, because they will be something that attracts attention and buzz amongst all of our mutual customers, and we want you to be super well prepared to sell these products, to support these products, understand these products, and to drive business opportunity that makes sense to you building from Windows and from Office.”
