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October 24, 2005

Microsoft to deliver hosted CRM

Posted by David Hunter at 10:58 PM ET.

Barbara Darrow at CRN:

Starting next spring, customers will be able to get hosted CRM from Microsoft—as well as from hosting partners.

At least that’s the plan the Redmond, Wash.-based software giant has now, sources said. Microsoft hopes to have hosted CRM available in the second half of 2006, with hosted Dynamics ERP likely to follow, sources said.

Well it’s next year anyway.

Howard Diamond, CEO of ePartners, Dallas, said hosted CRM is a natural for Microsoft and does not see a conflict with his own hosting business. “CRM is a funny thing. It’s the only [Microsoft Business Solutions] product that is also covered by Enterprise Agreements, so I make more money on the services than the product anyway. This is a logical evolution of the product that I need to do the service sales I want.”

Currently partners such as ePartners and NaviSite host Microsoft CRM and other applications for clients.

Thus far, Microsoft has not acted as a managed service provider except in some now-discontinued bCentral offerings, its current small-business Web hosting business and—to stretch a point—Hotmail.

The company is mum on exactly who will run the server farms and the applications, although Microsoft Chairman Bill Gates last month told CRN that it shouldn’t matter to partners. “The value-add of the partner isn’t reliant on the software running on the server on premise,” Gates said.

Because of competitive pressures posed by’s hosted CRM, and IBM’s On Demand messaging, Microsoft has to offer a hosted option, sources said.

A software company offering hosted versions of their software always runs the risk of alienating partners and confusing customers. On the other hand, the Microsoft Business Solutions (MBS) have been less than rousing success as a straight software offering. It’ll be interesting to see how well this plays out.

Filed under CRM, Coopetition, Dynamics, Hosted Services, IBM, MBS,

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