Microsoft Corp. plans to reduce the price its partners will pay for its newest
customer relationship management software, code-named Titan, the company's latest
foray into software-as-a-service (SAAS) CRM.

Microsoft has enrolled partners throughout the world to sell Titan, whose formal
name is Microsoft Dynamics CRM 4.0. Those partners will pay 40 percent less
for subscription licenses for the on-demand version, the company plans to announce
on Tuesday at Convergence 2007, Microsoft's European customer conference for
its Dynamics business applications.

Partners will now pay 40 percent less than they're paying for the previous
version of the software, Dynamics 3.0. Those charges vary by country and currency,
said Mark Corley, senior director of Microsoft's CRM channel strategy.

Partners pay licensing fees to Microsoft based on the number of seats they've
installed for their clients, said Bryan Nielson, director of worldwide product
marketing for Dynamics CRM.

"We give the software up front, and they pay us per use per month based
on actual usage," Nielson said. "They are only paying for what they
use."

CRM pricing models vary, but some software vendors require their partners to
pay up front regardless of how many seats they sell, Nielson said. But the 40
percent price drop for partners doesn't mean that end customers will see a commensurate
saving.

Partners will have the power to set their own pricing. "The drop in cost
to partners should theoretically allow partners to reduce the price to customers,"
said a Microsoft spokeswoman.

An executive with a Microsoft CRM partner in Europe, who wished to remain anonymous,
said Microsoft's previous prices had been a bit high, but a lower price should
help hosted CRM become a more attractive options for smaller companies with
lesser IT funds.

Some businesses liked that Microsoft CRM is delivered through familiar products
such as Outlook, but were concerned about configuration difficulties, he said.
"Hopefully, going forward with version four there will be a product that
will not only compete on price but can be configured and managed through the
partner network," he said.

Dynamics CRM 4.0 was supposed to be released around June or July, but Nielson
said it will be released by year-end. In general, Titan delivers customer-relationship
information through applications such as Microsoft's Outlook e-mail program,
the Internet Explorer browser or its Office productivity suite.

Microsoft is offering three versions of Titan, all of which are variations
on the same code base. It's offering a SAAS option, where the applications and
data are hosted on the partner's IT infrastructure. The partners use Titan as
a base and then build specific enhancements onto the software for certain industries,
such as real estate, Nielson said.

The second option is on-premise, where the CRM software and data is on the
end-customer's infrastructure. The last is Dynamics CRM Live, which is SAAS
but hosted on Microsoft's infrastructure. That option will only be available
in North America, although Microsoft said it plans to roll it out worldwide.

The success of Salesforce.com Inc. over the last few years awoke other large
software vendors such as SAP AG, Oracle Corp. and Microsoft to invest in hosted
offerings.

Although Microsoft is not a huge player yet in hosted CRM, the company "is
taking SAAS more seriously that any of the on-premise players," wrote David
Bradshaw, principal analyst for Ovum PLC, in a recent analysis.

Part of that seriousness has been making Titan multitenant, which means that
partners can host CRM applications for multiple companies on one server and
one application stack. That's more profitable for partners, wrote Warren Wilson,
also an Ovum analyst, in another analysis.

Also, sharing the same code base between the hosted and on-premise products
saves partners from having to build multiple versions of an application, he
wrote.

Microsoft has also said that Titan will support multiple currencies and languages
on the same server, which wasn't possible with its previous product, Dynamics
3.0, released in December 2005, although some partners created their own multitenant
versions.

All of the new features mean that "Titan will give Microsoft a potent
set of capabilities in the on-demand market and position the vendor to compete
much more effectively," Warren wrote.

IDG News Service

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