A recent joint announcement by Microsoft and Salesforce on their new partnership sent ripples across the IT and business worlds. With the ink hardly dry on a previous partnership announcement by Microsoft and SAP, it seemed a bit puzzling. So what is going on?
The conference call held by company CEOs provided a few clues. This isn't about Microsoft turning its back on its own Microsoft Dynamics CRM product or an about-face in its dealings with long-term partner SAP, so much as it is a way to broaden the market share of its core Office products. To that end, it is logical to make it easy to use Office on Salesforce and SAP, rather than trying to force customers of those companies to move to Microsoft Dynamics CRM.
The ExactTarget Factor
Microsoft CEO Satya Nadella mentioned empowering people to use Office365 and Salesforce seamlessly together by sharing Office documents within Salesforce or analyzing salesforce data.
Salesforce.com Chairman and CEO Marc Benioff used some of his trademark hyperbole to describe the deal.
"It's about combining the world's number-one CRM platform with Microsoft Office, the number-one productivity solution," he said during the conference call. "Customers want to work with Excel, Outlook and all of the Microsoft apps. And they wanted us to work together."
Benioff had been highly critical of Microsoft in the past -- and as recently as earlier this year. What changed? He listed the shift in leadership at Microsoft and Salesforce's acquisition of cloud marketing platform ExactTarget as contributing factors. ExactTarget is already embedded within Office 365, and that fact seems to have brought the two companies closer together.
"We are committed to integrating Salesforce more deeply with Microsoft's core strategy, which is Office 365," said Benioff. "They are using more of ExactTarget within Office 365 and that encouraged us to use more SQL Server."
Integration, Innovation in the Cloud
Ted Schadler, an analyst at Forrester Research, notes that companies using both Salesforce and Office 365 will have an easier time using both services together. For example, users will be able to store marketing content in Microsoft OneDrive for Business and use that content in their Salesforce marketing or sales emails. They'll also be able to send Yammer posts directly from a Salesforce opportunity record, Schadler said.
But he pointed to the bigger story: "With a small number of gigantic cloud providers, the integration between Microsoft and Salesforce becomes an important catalyst for innovation and improvement," Schadler said. "In the olden days, if you wanted to integrate two systems together you had to spend a lot of money on systems integration. In the new cloud world, once cloud providers have done the integration, every customer gets it for free. That's a very big deal."
IDC analyst Michael Fauscette believes the deal is good for customers of both companies. In particular, he said, Microsoft gets more support for services like OneDrive, SharePoint and Exchange, plus broader support for its most important franchise, Office (now Office 365).
"Microsoft also gets a small boost in support of its phone OS in Salesforce1 and a tacit endorsement of Azure with Salesforce keeping ExactTarget on Azure and promising loosely that other things will be on Azure in the future," Fauscette said.
Broader Office 365 integration is good for Salesforce customers, Fauscette said. It may also help woo prospects who use Microsoft products and who have been conservative about adopting cloud but are now considering it.
R "Ray" Wang, an analyst at Constellation Research, sees positive traction for Microsoft's self-service business intelligence/analytics app PowerBI, as Salesforce users often lack much of an analytics capability. Wang doesn’t believe the deal will impact Microsoft Dynamics CRM sales, as Microsoft tends to operate in different segments of the market than Salesforce.
Those firms already partnering with Salesforce or Microsoft (outside of the Dynamics CRM side) should also be happy with this deal, as it gives them a much wider prospect base in which to operate.
Salesforce partner Apttus, for example, offers quote-to-cash applications to manage the business process between the buyer’s interest in a purchase and the realization of revenue. Its X-Author app is built on Salesforce and marries it with Excel and Word.
"We see this as a win for anyone who uses Microsoft Office and/or Salesforce," said Apttus Chief Marketing Officer Kamal Ahluwalia.
Drew Robb is a freelance writer specializing in technology and engineering. Currently living in California, he is originally from Scotland, where he received a degree in geology and geography from the University of Strathclyde. He is the author of Server Disk Management in a Windows Environment (CRC Press).