Microsoft finally released version 3.0 of their CRM package last week. There are some interesting things to note about the release, especially its architecture. Microsoft partners have the option of hosting the software, but this is not to be confused with an on-demand, software as a service CRM like NetSuite. Phil Wainewright puts it very succinctly: In other words, the hosted version is identical to the traditional licensed package, not only at the user interface (which would be excusable) but architecturally too. Even when hosted, each customer requires its own instance — what's called in the trade a single tenant architecture — thus negating virtually all the advantages of the on-demand model. ...So it seems the general rule I recently cited about version 3.0 heralding a product's maturity doesn't apply in the case of Microsoft CRM. Jumping straight from 1.0 to 3.0 simply masks the truth that, at heart, this is still a hugely compromised version 2.0 product.
Months ago when the rumblings about 3.0 started Zach Nelson, NetSuite's CEO called it when he stated "It's no coincidence that NetSuite, RightNow and Salesforce.com were all founded in 1998. We all had to walk through the valley of death and we've come out the other side. You aren't now going to see 20 vendors enter this market." And while money talks in technology, even the richest company can't bend time. "Microsoft has the money but it doesn't have the time. This isn't something that you can just throw developers at." And in a "build, partner or buy" environment, Nelson said he believes Microsoft only has one option. "Even with all their money they're going to find they still have to build," said Nelson. "They aren't going to be able to buy any of us."
What is it that Nelson thinks you can't "just throw developers" at? Multi-tenant architecture. That's the key to software as a service. By creating a robust multi-tenant architecture you can sign up thousands of companies and serve them all with the same technology stack. But client-server applications that are hosted are a whole different animal, as Wainewright make clear. If you are interested we also have a whitepaper on our website about the difference between SaaS and the ASP model here http://www.sightlinesconsulting.com/s.nl/sc.2/category.2/.f Microsoft's move toward on-demand validates our belief that this the software delivery model of the future. There is just no way that companies are going to continue to accept the burden of managing, upgrading and patching on-premise software. The SaaS model, when done properly, enables the customer to throw these burdens back to the software vendor, where they properly belong. Evidently, MS is not ready to accept this responsibility. | 
