Microsoft was kind enough to invite me to Microsoft's Dynamics Fall Analyst Event — a two-day event packed with product, strategy, customer, and partner information. The focus was clearly on Microsoft Dynamics CRM 2011. This product and the go-to-market strategy are clear and focused. Here are my thoughts:

  • The Dynamics CRM 2011 product is good. Today, Microsoft Dynamics CRM is used by 23,000 customers, 1.4 million end users in 80 countries and 40+ languages. That in itself is impressive. However, Microsoft wants to do better. It has focused on the user experience and UI in the 2011 product in hopes of driving increased adoption. Dynamics CRM 2011 is deeply integrated with Outlook, Office Communicator, SharePoint, Office 365, and Bing. It can be easily personalized. A business user, without the help of IT, can set up a dashboard. It has rich reporting analytics. It works on mobile devices, including the iPhone. Microsoft realizes that this product still has limitations, especially around Web self-service customer service capabilities. Its near-term plans are to address this, as well as adding capabilities around support for the phone channel and for social customer service. However, right now, these holes offer a chance for specialty customer service vendors to make inroads.
  •  But it’s not about the product. Microsoft emphasizes that it’s the solution that matters, not the product. Its solution is the product customization that the company's partner network brings to solve the exact business pain that its customer is experiencing. The 10,000+ partner network, starting October 2011, will need to meet increased requirements to become a silver or gold partner, or to qualify for an industry badge. The new gold partners are the ones who offer best-class solutions, and industry partners will offer validated vertical solutions. This new “re-certification” ensures that qualified partners deploy their CRM solutions with success. This is a sensible move to clean up the partner network, which has caused problems in the past with mismatched expectations.
  • Deployment choice abounds. CRM 2011 is available on-demand and on-premise, and shares the same code base. This means that prospects can initiate a proof of concept on-demand, then implement on-premise – or vice versa. The takeaway is that the on-demand product is not a watered down version of the on-premise suite, and Microsoft offers a robust, global SaaS offering to allow users to have full control over their deployment choice.
  • CRM 2011 is an absolute bargain. Microsoft is advertising promotional pricing on its on-demand CRM product starting at $34 per user per month. This is well below list price for and Oracle OnDemand and puts pricing pressure on these vendors. This pressure is especially significant in the CRM suite product space, where all vendors offer mature products with robust capabilities. It will be interesting to see whether a pricing war emerges in the next months. And I am curious whether Microsoft is taking a loss position to garner market share – this is not a strategy that has always proven successful.

During the analyst day, Microsoft reiterated its four differentiators: choice (on-demand vs. on-premise), value (total cost of ownership), productivity (seamless continuity of work as emphasized in the integrations that CRM 2011 supports), and its partner ecosystem. Microsoft has the market presence to carry this off. But it will still feel pressure from the specialty vendors in this space, as well as will have a tough time making inroads in non-Microsoft accounts.