Microsoft and Salesforce.com: Unlikely Bedfellows

I was going to write a post today about the new update to Microsoft Dynamics CRM. However, that has been somewhat hijacked by the striking news that Microsoft and one of its arch rivals in the CRM space, Salesforce.com, have struck up a ‘strategic’ partnership.

It has sent the CRM world into a bit of a spin, at least on social media anyway. It is a shock: Marc Benioff (founder of Salesforce.com) has spent a lot of energy disparaging Microsoft, as this tweet from 2010 shows:

Indeed, there are many ways in which Microsoft Partners such as ourselves have been trained to compete with Salesforce.com. Tight integration with Microsoft Office, brilliant mobile apps and hosting on Microsoft Azure are just three advantages that look as though they would be neutralised by this news.

Salesforce.com employees are even banned from the Microsoft Worldwide Partner Conference:

So, at first glance, it’s a confusing situation. With many left wondering how it affects them, and their promotion of Microsoft Dynamics CRM.

From a product perspective, the momentum is definitely with Microsoft Dynamics CRM. Salesforce.com has consistently appeared in the top right corner of Gartner’s magic quadrant, but if you look at the movement over the last five years, Salesforce.com hasn’t really gone anywhere, whilst Microsoft’s offering has rocketed.

New functionality in the Spring 14 Update (review here) further adds weight to what is already an outstanding CRM application (or service if you’re in to the Cloud).

So, why have these two adversaries got into bed together?

Well, perhaps unfortunately for businesses solely dealing with CRM, it fits with Satya Nadella’s mantra of ‘mobile first, cloud first’.

If the strategy is all around increasing the market penetration of both devices and services, it makes sense to develop potential opportunities in that area.

I’m not talking about Microsoft acquiring Salesforce.com (although last night I did hear this as a possible end game for them).

If customers are loyal to Salesforce.com, then providing an integration to Office 365 opens doors to Microsoft products that were firmly locked before – from both sides.

That’s good news for Microsoft, and potentially good news for Microsoft Partners that sell Office 365.

If the news that Salesforce.com could be hosted on Azure is true, this also would present opportunities for Microsoft, although possibly not partners. Interestingly, it is understood that it was Microsoft who have paid for the relationship.

People have suggested the move is no different to relationships Microsoft already has with Oracle and Siebel. I’m not convinced on the comparisons.

We are seeing more collaboration between big vendors like this; Sage 200 Online is hosted on Microsoft Azure, Microsoft Office is now available on the iPad.

It is difficult to see how these vendors can operate totally in their own worlds when consumers want to put together solutions that fit their particular need.

Nonetheless, this particular partnership feels a bit uncomfortable right now. Perhaps it’s akin to meeting your parent’s new partner – it’s uneasy at first, but may be a lifelong, loving relationship. Only time will tell.

In the meantime, from a CRM perspective, we can be confident that the Microsoft Dynamics CRM application continues to go from strength to strength, already having the features the Salesforce.com and Microsoft tie-up will bring.

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