Salesforce on the offensive with On-premise Partnership

Salesforce.com and VMware announced a joint “exciting” announcement on April 27th. Register on www.vmforce.com. Scope of the announcement – “…make an exciting joint product announcement on the future of cloud computing”. It’s not that hard to undercover what is going to be announced.

For many years Salesforce offered an on-premise version their software for very large enterprises. But for many reasons problems and management of this version was a pain for Salesforce, as such the decision was to cancel the programme. Since Microsoft came up with their “Power of choice” model for Microsoft Dynamics CRM – Salesforce has been trying to convince us that there is not any cloud or hosted model in Microsoft Dynamics CRM. “Salesforce is the cloud application”.

Is must be a very odd situation for Salesforce to include a relationship for VMware to add on-premise capabilities. One could argue that the business model of Salesforce is under disruption or simply; they reached their maximum market. No matter what; Microsoft did come with the right model, and even Salesforce have to add on-premise to their business model. They could not themselves so they turned to VMware – who recently also acquired OpenExchange; a high competitor to Microsoft Exchange. Although a relationship with VMware could deliver the “Power of choice”; the solution will be offered, yet not complete. As one would say; “Would you run Microsoft Dynamics CRM through Terminal Services as a Cloud Service”? The obvious answer is NO.

Strangely enough the market is lacking support for all Microsoft technologies. It is a very disruptive market, although it only seems to be Google owning a different strategy and challenging Microsoft. Many of the key competitor’s like Salesforce and VMware have to acquire or copy the business models of Microsoft. Sad as this turns Microsoft to do the same; just recently announced their official name for the “PINK” project, Microsoft Kin!

Let’s see what is going to be announced on the 27th 😉

3 out of 5 – not bad at all!

Yup – this is the conclusion and finalization of a series of articles on the path Microsoft took to attach its own hosting channel. Let me just summarise:

Many years ago, in countries not far away from here, Microsoft helped and pushed a segment of its technical partners into what was to be known as “hosting partners”. Business models evolved and as ASP’s become SaaS providers, the hosting providers became service providers (although not many offers a service…). Business grew, new ventures was funded and the market for the hosting providers was not about competition, but harvesting the green fields of customers in need for outsourced services and “IT on tap”, untill…

1 of 5 – Microsoft to deliver Online Services
“Dear partners, to help grow the opportunities and market of hosted services, Microsoft is launching a commoditized solution for Online Exchange, Sharepoint, CRM and Unified Communications”. Microsoft’s field rushed towards their partner channel to calm them down as the message was: “There is plenty of room for us all, and we will help you combine Online Services with ISV based service”. Great! Online Services is just a part of the solution, we can still grow margins on secondary offerings.

2 of 5 – Microsoft to launch Azure!
“Dear partners, Microsoft is launching Azure to help of the next generation of ISV’s built Facebook-a-like applications; we wish to target ISV’s”. Well, didn’t you just tell us to target ISV as this was our opportunity to compete against BPOS? The message was changed. But rest a sure – a solution was to the channel conflict was launched. “Partners! Built dynamic data centers as this will help run business applications and legacy applications, that doesn’t fit with Azure. Virtualization is at its peak – this is a great opportunity and ERP applications form Microsoft will never live in the cloud”.

3 of 4 – Azure VM Role
“Partners, we have listen to customer demand, and customers want’s VM type environments to bridge the gap between now and the future of ho sting platforms.”. This time partners didn’t ask for a solution. Three strikes and you usually are out! But wait a minute! Corporate managers just recently announced that Dynamics ERP products is not to fit with the Azure and Cloud based business model. So maybe, we have a opportunity to drive these products in our costly datacenters? A new business opportunity…

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Microsoft to deliver virtualized servers on Azure

Another swing At the Microsoft Hosting Industry

Our fear was real. We didn’t expect to see it, we actually thought it was a rumour; but Microsoft is on a colliding path towards hosters and service providers. Todays announcement at the Microsoft PDC 2009 events proved our fear as Microsoft is going to launch virtualized server-based offering with the Windows Azure platform. Not only is Microsoft pushing their Dynamic Data Center Initiative towards hosters and service provider while behind the scenes building a strong value proposition to target the exactly same customers. Confused? I was!

Not only did Microsoft cut prices on Online Services 50% without giving the same opportunities to their partners (SPLA partners; hosters red.), but also leading a strong competition against them. Confusion must arise at partners with the leading DDC initiative whilst Microsoft launching the same services. As Bob Muglia happy announced:

“Bet on our online services, Dynamics Online CRM and Windows Azure. Focused on providing applications, infrastructure, platform, and data, now all as a service “ready for business now…They’re the foundation of everything we do.”

Why does Microsoft build this disruption? As I wrote yesterday, there is many reasonable points for Microsoft to deliver a Cloud Computing strategy. Cloud is not an evolution in the IT industry; it is the revolution! And in every revolution, somebody has to die.

What Now?
For established players in the field there is only to innovate and include competitive services to compete; now against Microsoft. For these companies, investments into their data centers, customer footprint and assets is not a 1-2 year job-position, where you just shift to a new chair if the market is changing. Of cause the DDC and VMWare initiatives can help reduce your operational costs; but deliver a new value proposition is not an option. Debts and economies are built on 3-10 year financing plans – only option is to consider Linux, third party software etc.. For the new entrants – focus your business elsewhere. You have to become really aggressive and differentiated to grow a success.

Where we believed the outsources (enterprise big dedicated hosting providers) would perish to the SaaS business model, it now seems like these players have a great differentiation.

Question: “So I want to built a business in Saas?”
Well – make no doubt that SaaS and Cloud Computing will survive. Yesterdays SaaS providers (mainly hosters) will be disrupted by tomorrows true SaaS providers (ISVs). If you want to built a succeeding business – become an ISV. Business like www.successfactors.com, www.e-conomics.dk, and www.xero.com all deliver a true SaaS value proposition. This is there the next killer app, and killer business model is.

http://www.microsoft.com/presspass/press/2009/nov09/11-17PDC1PR.mspx

http://www.betanews.com/article/Live-from-the-PDC-2009-Day-1-keynote/1258475450

http://66.226.8.65/post/Microsofte28099s-Windows-Azure-Platform-Gains-Traction-Among-Hosting-Providers.aspx

Azure VM Role – http://www.cloudpimps.com/2009/11/azure-virtual-machine-role/

http://www.virtualization.info/2009/11/microsoft-confirms-azure-will-be-iaas.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Virtualization_info+%28virtualization.info%29

http://bink.nu/news/windows-azure-launches-jan-1st.aspx