Microsoft partners “pissed” about pact with Salesforce

Last week Microsoft and Salesforce announced a partnership that extends integration between Salesforce's customer relationship management (CRM) software and Microsoft Office 365 applications.

According to R “Ray” Wang, principle analyst at Constellation Research, after the deal was announced dozens of Microsoft partners he advises expressed displease with the news. “They were pissed!” Wang said.

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Here’s the crux of the issue: Microsoft has its own CRM product named Dynamics and its biggest competitor is Salesforce's CRM. One of the biggest criticisms of Salesforce's CRM has been its integrations with Microsoft Office tools. Microsoft just solved that problem for Salesforce, and in doing so took away one of the biggest competitive disadvantages for its leading competitors product. Some Microsoft Dynamics partners were not happy about it.

Are there concerns justified? Yes and no, Wang says. The reality is Dynamics and Salesforce are the two big CRM platforms in the market, and they each have pros and cons. Salesforce is an all cloud-based CRM. Microsoft supports hybrid deployments that can run in customers' premises. Even with the increased fidelity between Salesforce and Office 365, Dynamics is still likely the best choice for IT shops heavily invested in other Microsoft products.

Dynamics isn't going away, Wang says, so the partners, and end user customers don’t have to worry about that. “They’re just unhappy with the fact that they were caught totally off guard,” Wang says about the news of the partnership. To add to the frustration, it has happened in the last months of the last quarter for many of these partners’ fiscal year. Not all Microsoft partners took it so hard.

“I wasn’t altogether shocked,” says Mike Nafziger, head of CRM consulting at McGladrey, a nationwide Microsoft partner of more than 20 years. In this day, Microsoft has partnerships with many competitors. Microsoft both competes and partners with SAP, for example as well. As for the battle between Dynamics and Salesforce on the CRM front, “These products will compete on their own,” Nafziger says. “The space is big enough for both.”

Could he see why other partners would be upset by the deal? “I didn’t lose any sleep over it,” he said. But a small, boutique CRM firm that has grown their business around Dynamics, could be justified in their concern over the deal, he said. Microsoft partners have less FUD to sling at Salesforce now.

Microsoft is committed to Dynamics though, which is evident by the investments the company has made in the platform. In the 2013 version of the product, Microsoft enabled the software to run across many different devices on Android, Apple and of course Windows phone, and certified it to run in multiple browsers including Chrome and Safari. A new user interface also integrated more social capabilities into the software, primarily around Yammer. Microsoft’s Dynamics chief reiterated the company’s commitment to the product after the deal as well.

In the new world of Satya Nadella running Microsoft, Wang says the company will likely be more open to making agreements with partners that the company may have traditionally thought of as competitors. But, in making a deal with Salesforce, both companies get a win: Salesforce users get greater integrations with Office 365 apps, and Microsoft grows its base of 365 users. If some Dynamics partners are upset by that, then so be it.

Microsoft and Salesforce representatives said the companies would not have any further comment on the issue beyond what CEOs Nadella and Marc Benioff said during a phone call announcing the deal.

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