CRM continues to rock and roll.

Last week, Gartner released their 2008 CRM Report. Details can be seen here.

Highlights

• Worldwide CRM Market grew 12.5% (from 2007-2008)
  
• Microsoft experienced the strongest growth around 75% (from 2007-2008)
• Salesforce.com grew 42.7% (from 2007-2008)
• Estimated 2008 Microsoft Revenue for CRM around $581M
• Estimated 20088 Salesforce.com CRM revenue around $965 M
• SaaS (Sofware as a Service) continues gaining momentum representing 20% from just over 15%

My observations

• CRM as a whole continues to rock and roll.
  
• Makes sense that SAP and Oracle are still market leaders with their legacy software being around for a long time (Peoplesoft, Siebel etc) but the market shares are definitely flatlining if not declining
• Microsoft Dynamics CRM and Salesforce continue their hot growth.
• Emerging markets will be the next big growth area
• One of the things that I dont think is accurate is the estimated Microsoft Dynamics CRM revenue of around $581M. That number seems too high to me. My guesstimate will be that Microsoft Dynamics CRM revenue will be b/w $400M - $500M. (Explanation below)
  

Ever since Microsoft stopped reporting the Dynamics (formerly known as Business Solutions group) revenue separately in 2006, its not been easy to get the numbers.

Back in 2006, the last time Microsoft officially reported Business Solutions group revenue, it was around $919 million. That included CRM, AX(Axapta), NAV (Navision), GP (Great Plains), SL (Solomon) and other products in the Dynamics product line.

At Convergence 2008, Kirrill Tatarinov (Head of Dynamics) mentioned that Dynamics revenue was around $1 billion. Internal sources within Microsoft had Dynamics CRM being around 20-25% of overall Dynamics Revenue. Even if we take the high end of that 25%, which means Microsoft Dynamics CRM revenue was around $250M. Taking into account 75% growth, that will be around $440M. With a 10% buffer either way, it bumps it upto around $485M. So my guesstimate will be b/w the $400 - $500M figure.

Now, one thing I am unclear is if Gartner included the other Dynamics product lines such as AX, NAV which have a quasi-CRM module in the overall CRM revenue figure for Microsoft? Although AX (Axapta), NAV (Navision) have a semiCRM module they are mainly ERP (Enterprise Resource Planning) products.

So
If Gartner estimate of Microsoft's CRM revenue consists of Microsoft Dynamics CRM, Microsoft Dynamics AX and NAV, then yes $581M for 2008 is definitely possible.

But
If Gartner estimate of Microsoft CRM's revenue is solely Microsoft Dynamics CRM, $581M seems too high.

But that being said, Microsoft Dynamics CRM continues to be a rockstar and it along with Salesforce keep gaining momentum and traction.

Update from Microsoft WPC -

So here I am writing the next blog post and coincidentally, its regarding another Microsoft event I'm attending. This time its the Microsoft Worldwide Partner Conference and am back in New Orleans. Partners are a big focus effort for Microsoft. In fact, 95% of Microsoft's revenues comes via its Partner channel.

What have the key takeaways been so far after Day 2?

Microsoft Dynamics CRM: Below are the takeaways and my observations

- Microsoft CRM had double digit growth in FY09: In past years, Microsoft announced 100%+ growth. Obviously, the economy has had an impact on all software companies and as Microsoft CRM has grown, its hard to keep up the 100%+ run rate.

- Microsoft Dynamics CRM crossed the 1 million user milestone. They announced they have over 1 million users and 20000 customers. In Convergence (March 2009), Microsoft announced 900,000 users and 18000 customers. So thats 2000+ customers and 100,000+ users in the last 3+ months. Not bad.

- Microsoft also announced 3 accelerators. Social Networking, Partner Relationship Management, Portal Integration. Of these they showed the Social Networking accelerator with the integration to Twitter at the keynote sessions.

- Microsoft placing a big bet on xRM. Its basically using the CRM Application as a Platform where the x can be anything such as Employee, Project, Product, Legislation, Supplier, Property. So its Legislation Relationship Management, Property Relationship Management. Essentially, building LOB (Line of Business Applications) using the Dynamics CRM as a Platform.

- Microsoft product team also had a Jack Bauer style 24 hr countdown to build a XRM application within 24 hours. Essentially, folks voted over twitter on what the X in XRM should be. The choices were Emergency Response Management, Sports Team Management etc. On Monday, the final votes were tallied and it was 'Sports Team Management' which they had to build by the Tuesday sessions. One of the cool things was in the demo on Monday, they showed the Social Networking accelerator and how twitter was integrated into CRM and tallying the different tweet responses.

Just by coincidence, the tweet they showed in the session while demo'ing was your very own truly's voting for Sports team management (and specifically Cricket Team Management). Didn't get the Cricket wish but they did build out the Sports team management application and showed it at today's demo which was pretty cool.

- Also announced that all of Microsoft will be running Microsoft Dynamics CRM within the next 12 months.

- Other take away was they did not really talk about CRM 5.0 so I guess its a while away.


Other observations and take aways

- Microsoft placing a big bet on Azure and the whole Software + Services model. In fact they just announced new pricing for Azure.

- Microsoft positioning Bing (vs Google), Hyper-V (vs VMWare) which is obviously to be expected.

- The Steve Ballmer keynote speeches are always a joy to watch. He is a bundle of energy and always entertaining to watch. One of the key takeaways was that for every opportunity for partners that might seem like its closing, there will be 2 0r 3 other new opportunities that will open up. He gave an anecdote that how in 1981, one of the biggest partner opportunity was writing additions to the TCP/IP stack. Well that opportunity is no longer there. This message was definitely geared towards partners and folks who are unsure with the whole S+S (Software + Services) strategy shift by Microsoft and how it might affect their business.

All in all a fun first few days. Last day for me tomorrow before I head out.