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BOSTON—Microsoft has announced—finally—its version of on-demand CRM software.

For more than a year the software giant has nosed around the fact that it’s working on customer relationship management as a service, but it wasn’t until its annual Worldwide Partner Conference here July 11-13 that Microsoft Dynamics CRM Live made its formal debut.

On July 11, Microsoft announced its road map for its next major release of its on-premises CRM suite, Microsoft Dynamics CRM—a plan that now includes on-demand capabilities.

While still part of the Microsoft Dynamics line of ERP (enterprise resource planning) software that resides under the Microsoft Business Solutions umbrella, the newly coined Dynamics CRM Live service will be under the auspices of the Office team—and operated and managed by the Windows Live data centers.

During a recent organizational restructuring, announced June 28, the CRM team was effectively moved into the Office group (and closer to SharePoint Services) under Vice President Kurt DelBene. That said, MBS Vice President Satya Nadella—in charge of business applications product development at Microsoft—will continue to guide the Dynamics road map that includes CRM.

Click here to read more about Microsoft’s Dynamics strategy.

It’s not yet clear where the two products—Dynamics CRM and CRM Live—differ. Both are roles-based, with an Outlook look and feel. Both offer standard CRM capabilities geared toward the small and midmarket, with the capability for partners to build applications on top of the core offering.

CRM Live, however, will be configurable at the user interface, application tier and database level without requiring any actual written code, officials said.

CRM Live will also be integrated with Microsoft’s Windows Live and Office Live—online services geared toward consumers and small businesses, respectively. The difference, of course, is that CRM Live will use the same code base as Microsoft’s on-premises CRM software—in turn, the same code base used by Microsoft partners that host Dynamics CRM. The idea is that even partners that currently offer a hosted version of Microsoft’s business applications won’t be cut out of the pie.

On the flip side, partners wishing to offer CRM Live don’t have to look too much further than the existing code base to do so. The Microsoft CRM Live service will share the same configuration tools used in on-premises CRM and hosted CRM offered by partners; partners will be able to develop their third-party applications and deploy them across all three deployment options.

“We believe in the power of software plus services,” said Jeff Raikes, president of MBS, in a statement. “Microsoft CRM Live will provide a software-as-a-service option for deploying our leading CRM solution and will also afford partners new opportunities to deliver their value-added services.”

Microsoft’s biggest competitors in the ERP sector—SAP AG and Oracle, for the most part—are also investing heavily in building on-demand services, particularly around CRM. SAP announced July 10 the acquisition of Praxis Software Solutions, a privately held company that offers on-demand CRM (and e-commerce) software for SMBs (small and midsized businesses)—Microsoft’s sweet spot. Targeting the enterprise market, earlier this year SAP announced its CRM On Demand services, delivered in what it refers to as a hybrid model: multitenant software with a single instance for each user.

Oracle is equally (if not more) invested in developing on-demand services. It acquired Siebel Systems for $5.85 billion on Jan. 31—a company that just about pioneered CRM as a major software sector—and developed a separate iteration for CRM on-demand. Oracle, in the process of building out Fusion, a superset of applications based on some of its recent acquisitions, has said it will standardize both its on-premises and on-demand CRM software on Siebel’s code.

Oracle is closing in on SAP in the CRM market after its purchase of Siebel. Click here to read more.

Microsoft’s Live programs are, in comparison, nascent. Many of the Windows and Office Live services are still in beta. Dynamics CRM Live is not expected until the second quarter of 2007—and in North America initially. Partners will have early access to the CRM Live services in the latter half of this year.

As for its on-premises CRM software—currently at Version 3.0—Microsoft officials said the company has seen “extremely rapid growth,” adding more than 50,000 new users in the most recent quarter. By comparison,, arguably the leading on-demand CRM provider, added 45,000 paying subscribers during its first fiscal quarter of 2007 reported May 17, bringing the total to 444,000. It also added 2,200 customers in the quarter, bringing that total to 22,700—a 46 percent increase from last year.

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