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Titan, Not Online Services, Is Microsoft's Real SaaS Play

Microsoft's trying to get attention this week for its "new" Online Services for businesses, including on-demand Exchange and SharePoint. But this is just rebranding of hosted software it's offered for a while. If you want to know Microsoft's true SaaS play, take a look at Titan.

That's the market-stompin' (in Microsoft's eyes) code name for Microsoft Dynamics Live CRM, based on a multitenant code base. Microsoft has visions of its Titan picking up the most successful CRM SaaS player in the market, Salesforce.com, and tossing it aside. Announced in July as part of an early-adopter program, Titan is now in the hands of more than 100 customer and partner organizations, Microsoft said this week. While the Microsoft Online Services announced this week is basically hosted software the company has offered for months, Titan is being offered in a multitenant architecture.

What's the difference? Most SaaS experts I know insist that in order to do on-demand software profitably, successfully, and on a large scale, you need to have a multitenant architecture. That means all of your SaaS customers have equal access to software, but their data remains separate. It's a much more manageable and committed form of SaaS, and makes it easier to offer things such as monthly subscription prices (Dynamics Live CRM, for example, costs between $39 and $59 a month per seat). Hosted software, on the other hand, is typically an arrangement negotiated on a customer-by-customer basis. Microsoft isn't releasing pricing for its Online Services apps, which means it's all negotiable.

But back to Microsoft's only multitenant offering … the next six months or so will be very telling on whether Microsoft's Titan will terrorize Salesforce or crawl back into a hole of insignificance. Until now, Salesforce has been the king of CRM on demand. The company this week announced another notable customer, Travelocity. And as Microsoft's Titan rolls up its sleeves in preparation for battle, Salesforce has chosen this defense: work like hell to expand beyond the CRM market. This week, it announced it has partnered with two venture capital firms, Bay Partners and Bessemer Venture Partners, to raise $25 million over the next three years to help startups develop all sorts of applications for its Force.com SaaS platform.

Will Microsoft ever venture into pure multitenant SaaS beyond Dynamics Live CRM, offering, for example, a $39-a-month subscription for Microsoft Exchange Online? I don't see any incentive for it to do so, given there's no on-demand e-mail vendor out there with anywhere near the momentum of Salesforce. SaaS simply doesn't pay Microsoft as well as licensed software, even if it's hosted as part of the Microsoft Online business. But the level of CRM Live's success, unquestionably, will have an impact on Microsoft's overall SaaS strategy, and whether it sees multitenant architecture and subscription-based pricing making sense and producing palatable profits for other types of business apps.

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