Microsoft Hits Back at Salesforce, SAP

New on-demand CRM pricing shows Microsoft is tired of being Benioff's punching bag.

Microsoft has always been late to markets and made up for it by competing with dollars. As in, a lot less of them than the competition. So to take some market share in the CRM space from the on-premises leader SAP and the on-demand leader Salesforce, Microsoft is launching a new low-cost licensing program for Dynamics CRM.

The timing can't be an accident: Salesforce is holding its massive Dreamforce conference this week in San Francisco (complete with an appearance by Metallica). In making the announcement, Microsoft cited data from Forrester Research claiming the global market for cloud computing is expected to grow from $40.7 billion this year to more than $241 billion by 2020.

As part of the deal, Oracle, Salesforce.com or SAP customers that switch to Microsoft Dynamics CRM Online will receive a $150 per user rebate that can be used for services such as data migration. Customers must agree to a two-year commitment and must purchase between 50 and 500 client access licenses (CALs).

It's not the first time Microsoft has used a financial incentive to lure customers. Earlier this year, Microsoft offered a $200 cash rebate per user to companies that switched from Salesforce's service.

Microsoft argues Dynamics CRM gives customers the choice of on-premises or on-demand, since some customers are not comfortable with having their company data located off-site.

"Microsoft is the only vendor that gives customers a choice in how they deploy the software, with a fully functional public, private and hybrid cloud offering. Salesforce.com customers that want private cloud solutions to meet technical, regulatory or business policy requirements are simply out of luck," Michael Park, corporate vice president for Microsoft Business Solutions, said in a statement announcing the program.

The company is also keeping up with the competition on the performance side. The most recent version of Dynamics CRM, released in February, was said to scale up to 150,000 concurrent users in a single instance while maintaining fast response times.

Dynamics CRM Online is the SaaS version of Microsoft's customer relationship management software, which is typically installed at the customer's office/data center. Salesforce was the first to offer a pure play on-demand version of CRM, while SAP was for the longest time the leader in on-premises CRM software but has since gotten into the SaaS game as well.

Copyright © 2011 IDG Communications, Inc.

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