CRM Software solutions are an integral part of the sales, marketing and customer service of most organisations. Today, CRM Software dwells far further than these functions to manage all business requirements. This has been termed by the people at Microsoft as xRM – (x) anything Relationship Management. Choosing which solution is right for your company is not easy and often companies compare different CRM offerings. Two of the major CRM software applications on the market today are Microsoft Dynamics CRM and Salesforce.
There was a time with these two CRM software applications the choice was more black and white. You either looked at software deployed in-house (Microsoft Dynamics CRM) v the software-as-a-service model (Salesforce).
Now that Microsoft has moved into the cloud with their software as a service model and Salesforce now has a development platform with its “Force” offering your options are now blurred.
Salesforce was founded in 1999 with a vision to create an on-demand information management service that would replace traditional enterprise software technology. Salesforce calls itself “the enterprise cloud-computing company”. Sales Cloud™ and Service Cloud™ are Salesforce’s applications for sales and customer service. Their approach to the cloud computing deployment model has led to them developing the force.com cloud platform that allows developers and users to build business applications on top of the Salesforce offering.
Microsoft Dynamics CRM, created by Microsoft product team with vast resources was designed with a long-term vision that will allow Customers to use CRM with multiple Microsoft products and choose deployment options to meet organisational needs.
IT researcher Springboard found Australian and New Zealand was already the most mature market for SaaS applications in the Asia-Pacific region.
According to BRW Magazine the market is tipped to grow 45% a year in Australia and New Zealand from $UA 1.7 billion in 2008 to $US7.7 billion by 2012. The magazine also referred to customer relationship management software as the most popular SaaS application (35 percent) and that “companies in Australia are using SaaS because it’s cheaper, rather than because it’s easier to use. Only 9 percent cited “ease of use” as the reason for choosing SaaS.
Choice and Flexibility
With a multitenant CRM solution, Microsoft Dynamics CRM offers any number of deployment options, depending on your needs. On-demand, on-premise, and partner-hosted models are available for Microsoft Dynamic CRM. If your deployment requirements change so too can your CRM software deployment options as each deployment option is built on the same modern architecture and data model. For example, you can take your configurations and data hosted by Microsoft and move to In-House or to a Microsoft Partner web based CRM software hosted model. Salesforce platform offers SaaS by the Cloud and you don’t own the software and configurations. If you want to change to an in-house solution you need to move to another CRM application. You need to factor the cost of getting your data out of Salesforce. Depending on the level of subscription you purchase for Salesforce there have been reports of your data being held hostage. This is, depending on your level of subscription you need to upgrade your subscription in order to export your data.
Salesforce claims to cost significantly less but Microsoft Dynamics CRM insists that the comparison is not for like services. A-la-carte pricing that is additional to potential price hikes at contract renewal time can significantly affect the total cost of Salesforce. When assessing comparable online products between the two opponents, Microsoft Dynamics CRM Online is available for less than 50% of the Salesforce fee. The latest pricing in the USA indicates that “Microsoft CRM [Online] runs $44-59 per user per month, compared to $125 for Salesforce” Professional Edition.
Entry price for Salesforce is cheaper but if you want more functionality you obviously have to pay more. With Microsoft CRM you have access to the complete system from the moment you first purchase. Your purchase decision should never be based on solely on price as its only one component in the decision making process. Those that buy first time around on price usually call back 6-24 months later asking for help. From personal experience decision makers who purchase solely on price first time around re-purchase the second time around on service. To compare in-house versus hosted pricing you need to calculate over a 3-5 year period and not just 1 year.
Ownership of Data
Salesforce, as a software-as-a-service provider, does not own the data collected by its customers. Instead, its data centres are outsourced to Equinix, a third party company in the USA and Singapore. With Microsoft CRM for in-house, and partner hosted options, customers have full control over the security and physical location of their data. You can swap and take your data between these options. Microsoft CRM Online hosted by Microsoft will be released in Australia late 2010 and the data will be hosted in Singapore. Again, you will have the ability to move from hosted to in-house but the online model will have some restrictions around customisation code. In order for Salesforce customers to get development platform capabilities they must buy the unlimited version.
Ease of Use
Microsoft Dynamics CRM is designed for easy user adoption because of its similarity and compatibility with Microsoft Office and Outlook. Simply put, it is designed to minimize the need for training, reduce application switching, and produce high productivity. With the launch of Microsoft CRM 5 or 2011 its release name), Office 2010 and SharePoint 2010 the GUI (interface) between the three product suites becomes very similar in look and feel. This provides users with an easy to learn experience and greater chance of user uptake.
Salesforce graphical interface is modern and should be easy to use for most users. The integration to Microsoft Outlook and Office is reported as not as strong as Dynamics CRM especially for MS Excel and Outlook. Those using Google Mail will find Salesforce to their liking.
Both Salesforce and Dynamics CRM have similar modules including sales force automation, customer service and support, marketing automation, document management, contract management, product catalogue management and reports. Although each module for each product has its strengths and weaknesses side by side you need to evaluate each application module against your business requirements (and not user likeability).
Often an organisation short lists three CRM applications to be presented to its users. Evaluation should not be based heavily (if at all) on the users liking the look and feel of the graphical interface. The users of an organisation tend to agree on one CRM application as by nature we feel most comfortable with what we already know. If you ask a salesperson who has been using a paper diary for 30 years, what is better? A paper based or CRM system the answer is always paper! Over the years I have witnessed three different systems put in front of users at different organisations and there is never a clear winner for the CRM application chosen.
At present, Salesforce has a lot of easy to use business add-on products for its core offerings built on its force.com platform. Microsoft has a host of ISV Partners who have built add-on products to Microsoft CRM but it’s not as easy to find these add-on’s spread out across the globe on various websites. Microsoft has just launched PinPoint that allows you to search globally for Partner software solutions. Also, Microsoft CRM Dynamics Online does not provide the same access to write custom code in a sandbox because Microsoft did not want outside code in its own application, but with Microsoft Azure, ISVs can execute their own code.
Access to CRM and Email
Microsoft CRM is available either through a web browser, through a mobile device or through a plug-in to MS Outlook. Salesforce integrates with Microsoft Outlook, Lotus Notes, or Google App’s. Salesforce will run on a mobile device, through a web browser and if you want some level of Email (Outlook, Lotus Notes, or Google App’s) integration, however you will still need to download and install a Salesforce connector.
Scope and Support
According to Wikipedia, Salesforce offers support for 16 languages, while Microsoft Dynamics CRM offers support for 25. Microsoft Dynamics CRM’s ecosystem includes 750,000 solutions partners; 2,200 users groups, and 400 community web sites globally. Standard support included in Salesforce’s subscription fee allows for a 2 business day response time. With Microsoft, support is dependent on the licensing module used to purchase the software and the support offered by a Microsoft CRM Partner. You can choose from ad-hoc through to dedicated support.
The Future and Investments
It has been reported in online publication The Inquirer.com that Microsoft will spend US$9.5 billion dollars in 2010 on research and development making it the largest R&D technology spender in the world.
In 2008, Salesforce spent $63.8 million, or 8% of its revenue, on research and development, much of which went towards expanding the Salesforce’s cloud computing abilities. In addition, 91% of salesforce’s revenue comes from subscription and support fees from their cloud computing services.
The CEO of Zoho, Sridhar Vembu first made this good point in April 2008 by noting the disparities in R&D and sales & marketing spending by Salesforce. Using the financial data from the last 12 months, Salesforce’s sales and marketing spending of $605 million was almost 5 times its R&D spending of $131 million. It has been reported in businessinsider.com that Google, R&D spending of $2.8 billion was almost 1.5 times that of its S&M expense of $2 billion.
There is no doubt Salesforce is a leader in the SaaS market. The question will be whether the heavy weights including Microsoft (with Azure and BPOS) and Google with its GoogleApps MarketPlace will be able to stay in the game as the heavy weights begin gaining heavy market share in the cloud.
SaaS versus In-House
A note on SaaS versus In-House deployment. “In 2009, within enterprise applications, SaaS represented 3.4 per cent of total enterprise spending, slightly up from 2008 at 2.8 per cent,” said David Cearley, vice president of Gartner. This market will reach $8.8 billion in 2010, according to the company’s forecasts.
From a market perspective, most of the spending for SaaS is occurring in the content, collaboration communication, and customer relationship management markets. Collectively, they represented 65 per cent of the global enterprise applications software market in 2009. Many of the bad practices that occurred in the on premises world are now moving their way into SaaS.
The biggest example is shelfware. “Shelfware-as-a-service is the concept of paying for a software subscription that is not being accessed by an end user,” said Cearley. “This most commonly occurs in large organisations, but it could happen to any company, especially those that have downsized their workforce, or one that has oversubscribed to trigger a volume discount.” “SaaS may not have delivered on its early grand promises – of the current SaaS deployments we estimate that a total of 90 per cent of SaaS deployments are not pay-per use – but it has reenergised the software market and added choice,” Cearley said.
First Steps in Choosing Your CRM Solution
Your first step in determining which solution is right for your company is to document your CRM requirements. Secondly, research to see what CRM applications are going to meet your requirements. Third, bring in a CRM consultancy firm and/or CRM Vendor to discuss your requirements and demonstrate their knowledge and application to you. Whether you go hosted or in-house should always come after you’ve gone through the above steps.