By David Sims

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The news as of the first coffee this morning, and the music is from the Leonard Bernstein Century series of recordings, this one’s him conducting Aaron Copland’s Appalachian Spring:

Some industry reax on Microsoft Dynamics CRM 3.0:

Barbara Darrow, one of the more perceptive industry observers, writes “With Microsoft Dynamics CRM, the company now offers a ‘rent-to-own’ option. But partners wanting true multi-tenancy will have to wait for the next release, code-named Titan.”

Tenancy is an issue others have commented on as well. This reporter heard from RightNow Technologies’ CEO Greg Gianforte, who explained that Microsoft isn’t actually hosting the applications, their partners are and will offer single tenant hosting.

“One of the breakthroughs in hosting is multi-tenancy, multiple applications on a shared set of hardware, which is the standard for successful software-as-a-service companies,” Gianforte said. “There are no economies of scale or margin in single tenant hosting. This model was introduced in the 90’s and failed.”

Partners wanting to host Microsoft CRM can now do so for $24.95 per user per month via a new Service Provider Licensing Agreement option, Darrow says, compared to salesforce.com Enterprise Edition’s list price of $125 per user per month, and Salesnet Enterprise Edition’s $99 per user per month:

“With this SPLA pricing, Microsoft has started to move toward true hostable product. But the company has not been able to deliver, as hoped, a true multi-tenancy solution yet.”

John Pallatto sees Dynamics as Microsoft’s “bid to make customer relationship management more pervasive in companies large and small,” and cites the widely-cited Forrester CRM analyst Liz Herbert who says that “while it doesn’t present a strong direct challenge to companies that are providing true, multi-tenant on demand CRM applications, it addresses the needs of customers who don’t want to deal with managing the IT resources required to host the application on their own sites,” in Pallatto’s words summarizing Herbert’s comments.

Herbert also told Susan B. Shor that the product “will see some traction in larger enterprises, but more at the division level where a division chooses on its own to change CRM systems… Oracle, SAP and Siebel tend to be long deployment, high-cost, high-risk investments, whereas, Microsoft CRM is quicker to deploy and has a lower upfront cost.”

The tradeoff, Shor says, who calls Dynamics “a giant step from previous versions,” is that Dynamics “is lacking some of the functionality of those massive programs.”

Ephraim Schwartz calls Dynamics “a second front in its assault on the CRM market… a step beyond SMBs, with the company targeting the enterprise for the first time.” He says Dynamics’s reseller model is “not really an indication that Microsoft is moving to a full software as a service offering.”

And the federal government’s being targeted: Dibya Sarkar writes that Microsoft “expects to capture a significant segment of the CRM market in government,” primarily because Dynamics is tightly integrated with both Office and Outlook, already widely used across the federal government.

“[Dynamics] really pushes usability, adoption and the widespread pervasive use of CRM across a variety of information workers who before were too intimidated or felt that a CRM system wasn’t part of their job,” Sarkar reports Kevin Faulkner, the company’s senior director of product marketing as saying.

“Typical CRM applications are specialized, require detailed knowledge and are not easy to use,” Sarkar writes. “But because many workers use e-mail, electronic calendars and other functions, integrating the latest version into Outlook was a no-brainer. The application is widely used, and the CRM functions blend easily.”

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