Microsoft To Clarify Murky 'Live' Strategy At Partner Conference

"We do lot of business with Microsoft, but this is the one area where I don't think they've been very clear," said Dave Sobel, CEO of Evolve Technologies, a Fairfax, Va.-based Gold partner. "We've been successful partnering together, with them delivering software and solutions and us delivering services. I can certainly see how SaaS will fit in into this, but I'm still waiting to see what the final product will look like."

Several Microsoft channel partners echoed his concerns, telling CRN that the vendor hasn't communicated its software-as-a-service (SaaS) strategy well enough to assuage their fears. One solution provider noted that partners that depend on revenue from installation and configuration services revenue stand to lose out if Microsoft handles deployment directly, as it plans to for its CRM Live customers.

"I think they should have clarified how [SaaS] is going to work by now. It's disconcerting to me as a partner that they haven't," said the source. "If they were concerned with what partners think, they'd have come out and explained how it's going to work. By not doing so they're adding to the paranoia."

Microsoft plans to address that issue at WPC, devoting significant keynote time both to explaining its broad "software plus services" vision and to detailing the specifics of pricing, deployment plans and partner margins for CRM Live, due by the end of the year as part of Microsoft CRM's "Titan" release.

CRM Live is Microsoft's guinea pig. While the company has dipped its toes in hosted-software waters with products like Office Live -- an SMB-targeted online bundle of Web services such as e-mail and site hosting plus Web-based project and document management tools -- CRM Live will be its first service to directly challenge offerings from pure-play SaaS vendors like Salesforce.com, NetSuite and RightNow Technologies.

If it takes off, it's a delivery methodology Microsoft would like to replicate throughout its product line. "[CRM's] example is the strategy," Allison Watson, corporate vice president of Microsoft's worldwide partner group, said in a recent interview. "Every product available on-premise, off-premise, or hosted by a partner, with models for reselling, referral and adding-on."

That's a prospect that spooks some partners. With CRM Live, Microsoft will have a direct, ongoing billing relationship with users, a position it hasn't been in before in the enterprise applications market. In a survey of 250 solution providers conducted in May by CMP Channel Group, only 22 percent said they worry that vendors' SaaS offerings will take away from their own business (32 percent viewed SaaS as an opportunity, while 46 percent don't expect it to affect their business). But when asked which specific vendor, if any, they viewed as a SaaS threat, more than a third cited Microsoft, which drew more votes than all of its rivals in the top software ranks (Oracle, SAP, Sage and several SaaS vendors) combined.

Microsoft executives insist that there's plenty of partner opportunity in their Live software push. Even with Microsoft hosting and maintaining the applications, the company expects customers to work with partners on deployment and customization.

"We want to have customers engaged with partners," said Microsoft CRM General Manager Brad Wilson, who will oversee CRM Live's rollout. "Partners might offer an eight-hour quick-start. I'd rather have a customer get an eight-hour quick-start than do it themselves." Microsoft also hopes partners will be deeply involved in customization, developing add-on functionality, and building versions of its CRM software tailored for industry verticals.

But Microsoft executives don't hide the fact that some partners will need to change their business models to adjust to the new SaaS realities. With "software plus services" as its mantra, Microsoft is committed to delivering its software in whatever fashion customers would like to consume them -- and if that means traditional on-premise deployment work dries up, the company expects its partners to roll with the punches and move into new service areas.

"Partners, like people, are sometimes resistant to change," said Robert Deshaies, vice president of Microsoft's U.S. partner group. "We've got to continue to show them that just as we're continuing to reinvent ourselves, they've got to continue to reinvent themselves."

Steadfast partners expect Microsoft to keep them front of mind as it draws up its SaaS road maps. Despite his feeling that Microsoft has been lax in communicating with partners about its SaaS plans, Evolve Technologies' Sobel isn't overly worried about how those plans will play out. "It's highly unlikely that they're going to start picking off partners, because everything they do is partner based," he said.