On the heels of another quarter of beating Wall Street’s earnings estimates, the bullish sentiment around Salesforce couldn’t be higher. Analysts are upping their price targets for the San Francisco-based giant, even after it offered somewhat conservative forward-looking guidance.
While I have long been an advocate for Marc Benioff’s software-as-a-service (SaaS) monster, I now believe that Salesforce CRM, +1.45% might be in the crosshairs of a sleeping giant: Microsoft MSFT, +0.93% Thanks to growing momentum for Dynamics 365 software applications, the tide for customer-relationship (CRM) software may finally be set to turn in favor of the Seattle company.
In the world of CRM, Microsoft may not be a household name the way Salesforce is, but that hasn’t stopped it from trying (and failing to slow Salesforce). Microsoft first jumped into the space, following the acquisition of Great Plains in 2001. That brought us Microsoft CRM (which eventually morphed into Microsoft Dynamics). It wasn’t a bad product. It’s just that the company didn’t have an answer for the as-a-service subscription model that Salesforce came to the market with early, and turned into a vehicle for profits and growth.
Microsoft didn’t give up, though, and has been working for some time to remedy the problem.
Here are three reasons why I think that Dynamics 365 is finally ready to compete head-to-head with Salesforce, and take a giant bite out of its lunch:
1. Microsoft has long lacked a cloud-based offering that could match the functionality of Salesforce. With the launch of Dynamics 365, Microsoft finally has a solution that meets the requirements of a large portion of Salesforce customers. For starters, with the addition of a subscription-based cloud offering, it is easy to get started. Second, this new version is much more user-friendly than Microsoft’s previous attempts. CRM experts have already started to cover the specifics, but Microsoft appears to be on point with pricing, simplicity, and flexibility.
2. Due to companies attempting to be more secure with their data and in compliance with privacy requirements, we are seeing a trend toward repatriation of certain cloud workloads. For Salesforce users, this leaves zero flexibility, as the only deployment method of their software is a pure hosted SaaS configuration. That’s a pain point for Salesforce users.
To address this problem, Microsoft Dynamics 365 offers a refreshing breadth of flexibility of public, private and hybrid options to manage diverse data differently in a multi-cloud environment. With companies making software investments based on both technology and business needs, Dynamics has set itself up to be more appealing to IT leaders eager for flexible deployments options that meet their security and privacy requirements.
3. Microsoft’s paid user base for its wide net of solutions and integrations already is in the billions. From Office 365 and Skype for Business to Azure Cloud, Microsoft has a deep connection to both a company’s lines of business and its IT department.
As the integration between Dynamics 365 and Microsoft’s ecosystem of collaboration and productivity solutions grows, I expect to see a natural migration among companies that see value in unifying their Microsoft-centric ecosystem. Bringing CRM, enterprise-resource planning (ERP) and other critical solutions in which Salesforce has long led the way with into a Microsoft ecosystem is bound to be an appealing option for many. That Salesforce hasn’t exactly pulled ahead of Microsoft in new areas like artificial intelligence and blockchain suggests there may not be any new reasons for customers to favor Salesforce over Microsoft.