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Microsoft Dynamics CRM Partner Programs

 

Hosted CRM Software Partner Pricing

October 24
Microsoft Business Division President Jeff Raikes announced a deep 40 percent partner discount beginning January 1. This lowers an already low channel partner price from $25.00 USD per user per month to $15.00 USD per user per month. The duration for this discount is not known. Raikes also indicated that at this time there are approximately 650 business partners offering the CRM hosted solution, including some larger international partners such as JayThom Pty Ltd. in Australia, EveryWare AG in Switzerland, Increase Ltd. in the U.K. and Mondo A/S in Denmark.

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CRM Software Partner Program In Transition

Since Microsoft's entry into business applications with the acquisition of Great Plains Software in 2000 and the subsequent acquisition of Navision in 2002, the company seems to have incurred difficulties in integrating an acquired business solutions partner channel with its (then called) solutions provider channel, aligning more sophisticated software product solutions within a broad spectrum of partner types and maintaining a partner-only sales distribution channel.

Microsoft Dynamics CRM software, which previously incurred other names such as Dynamics CRM, has gone from being distributed by the seemingly more focused business solutions partners only, to being mass merchandised by every type of Microsoft partner (including online e-commerce storefronts and brick and mortar retail stores) to being distributed and served directly by Microsoft without partner involvement.

After casting FUD (fear, uncertainty and doubt) toward SaaS solutions for years, Microsoft has finally figured out this is an industry momentum which they cannot slow - and which they are better advised to join rather than fight. As said by Microsoft COO Kevin Turner at the Worldwide Partner Conference in Denver (July 2007) during his opening keynote "This is a hard transition. It was a hard transition for us to accept a couple of years ago, and it's one that's full steam ahead at Microsoft. This is a different business model." "My call to action for you today is: 'Look, this is going to happen... The customer is going to want the choice. We'll help you, we'll work with you, but this change is going to happen."

Are Microsoft partners worried by Microsoft selling direct? Many are. In a survey of 250 solution providers conducted in May 2007 by CMP Channel, when asked which specific vendor, if any, Microsoft partners viewed as a SaaS threat, more than a third cited Microsoft themselves, which drew more votes than all of its rivals in the top software ranks (Oracle, SAP, Sage and several SaaS vendors) combined. It seems partners may become concerned if Microsoft performs services the partners previously performed themselves - services such as billing the customer directly, deploying the software, pushing updates the software and pretty much all facets of the software installation and management.

It appears that the biggest internal business solutions channel advocates vacated Microsoft around the time of Doug Bergum's departure (June 2007). Bergum was the former Great Plains CEO, brilliant with regard to channel development and a die hard channel-only supporter.

As of mid-2007, Microsoft has reduced CRM software margins from the one industry expected range of 40 to 50 percent to a referral fee of 10 to 15 percent. In July 2007, Microsoft announced at the Worldwide Partner Conference in Denver that Microsoft may or will ultimately sell and host direct (from their Virginia data center), however, remit a 10% referral fee margin to partners that bring new client contracts. To grease the skids for first year revenue opportunity, Microsoft will actually provide a one year only 15% margin for 2008. For partners who wish to host the customer relationship management software themselves, CRM subscription pricing is $24.95 per user per month to the partner and the partner may then determine final pricing for customers.

While this approach may bring new partner entrants, it is sure to alienate long time business solutions partners or partners whom understand the sales talent and costs needed to successfully complete long and complex sales cycles required of the marketplace.

We feel confident this partner program is certain to go through at least a few more iterations before settling.

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