Stellar growth for online CRM spurs a Microsoft / Salesforce duel

Microsoft and Salesforce.com are at loggerheads over online CRM. Microsoft just rebranded its service and retooled its software, Salesforce is partnering with Google to parry Microsoft, and verbal attacks from both sides verge on vicious.

Why? As some analysts see it, software as a service (SaaS) opportunities have never been bigger anywhere than right now with CRM.

Although the on-premise CRM market will grow at merely 6.2% through 2010, on-demand -- or online -- CRM will soar at the astounding rate of 41% annually over the same period, according to a new report by Tier 1 research.

"The global growth story for the on-demand CRM market is clearly an exciting one. And while the rising tide will lift all boats, it is evident that some boats will rise higher than others," according to Wesley Kennedy, a Tier 1 analyst.

In comparison, back in 2006, on-premises deployments still "ruled the roost" in CRM, even with all "the buzz in the air about SaaS," said Michael Mankowski, a senior analyst at the research firm, about a report on the same topic a couple of years ago.

With such accelerated growth ahead, it's no small wonder that Microsoft and Salesforce are practically wielding knives at each other in their efforts to carve out more online turf.

After renaming its online CRM offering from CRM Live to CRM Online last month, Microsoft released it into general availability yesterday, telling reporters that the product is the first in a series from Microsoft being rewritten to support "multitenancy" -- in other words, partitioning online content so that customers can't access each other's data.

Also last week, Salesforce.com announced tight integration between its own CRM Online and Google Apps, combating Microsoft with a new online combo between office productivity tools and e-mail with CRM.

The maneuvering between Microsoft and Google isn't always that nice. For instance, prominently posted on Microsoft's CRM site this week is a piece by blogger Chris Bucholz entitled, "Thank goodness they didn't call it Googleforce."

Bucholz writes rather acerbically that the recent joint announcement by Salesforce and Google allowed the two companies to "stick a thumb in the eye of Microsoft on the eve of the release of Microsoft Dynamics CRM Online."

Meanwhile, Salesforce.com also seems to be using an advertising partnership with Google to jab a few pinpricks in Microsoft, too, incorrectly implying that Microsoft doesn't even offer online CRM.

In a Google search last week using the keywords "Microsoft CRM Live," BetaNews turned up a sponsored link dubbed "Microsoft vs. Salesforce." A click on the sponsored link brought us to an ad on the Salesforce.com Web site for a CRM white paper.

According to an online blurb on the Salesforce site, "Independent research comparing companies using on-demand CRM to those using on-premises CRM show better overall performance for the on-demand customers."