NetSuite wades in to Microsoft CRM debate

NetSuite CEO Zach Nelson has waded into the debate over the threat Microsoft's on-demand offering will present to a CRM market created by upstart start-ups such as RightNow Technologies, Salesforce.com and his own company.

Marc Benioff, CEO of Salesforce.com, earlier this week suggested Microsoft's announcement may be too little too late. Now it's the turn of Nelson to put the boot in, taking a swipe at, among other things, the likelihood of Microsoft hitting its 2007 release date.

He said: "We all know how good Microsoft are in keeping to their dates."

But where Nelson and Benioff differ is understandably on predicting the effect Microsoft's Dynamics Live offering is likely to have on Salesforce.com.

Nelson said: "Depending on the level of functionality it will have, and the pricing it will have, it could impact standalone CRM vendors like salesforce.com." He claimed NetSuite may be less impacted because its customers may come for the CRM but they stay for the ERP.

But whatever these men think of Microsoft - publicly and privately - they both agree that Microsoft's announcement is a ringing endorsement of the on-demand model which they have touted since 1998.

Nelson said: "It is basically the final blow to traditional software," though he expressed doubts about the extent of Microsoft's commitment.

He told silicon.com: "Software as a service is not a CRM-only phenomenon. Is the Microsoft CRM product a tactical effort due to market pressures or is it a strategic direction for the entire Dynamics product line?"

However, it does represent a major cultural change for Microsoft and Nelson predicts it will take some getting used to for the Redmond behemoth.

He said: "The fact that Microsoft will be hosting the application is a strategic change. They have always said they would let their partners host the solutions. Of course, that was an absurd position and either indicative of naiveté or just trying to keep their partners from feeling cut-out until the moment of truth.

"In software as a service the company writing the software has to host it. In short, this change should unsettle their channel."

Jason Nash, UK CRM product marketing manager at Microsoft, said he expects the Live offering to appeal to partners, as it will "create new opportunities by allowing them to reach customer segments that they aren't addressing effectively today" - such as "low-end customers that don't want an on-premise system".

However, Nash admitted "there will be some potential overlap with hosting partners".

He said: "But we are strongly encouraging them to focus on more value-added scenarios and to avoid simple commodity hosting of Microsoft CRM.

"Our current and future hosting partners can offer a range of more complex services than we plan to provide with CRM Live."