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5/30/2014
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Microsoft, Salesforce.com Make Nice, Marry Apps

Salesforce apps will work with Office 365, Windows, Windows Phone. Microsoft keeps using ExactTarget. But don't expect Salesforce apps on Azure.

Apple WWDC 2014: 9 Things To Expect
Apple WWDC 2014: 9 Things To Expect
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Microsoft and Salesforce.com announced a partnership on Thursday that promises tight integration between Salesforce CRM applications and Microsoft's cloud-based Office 365 productivity apps. In addition, a new Salesforce1 App for Windows and Windows Phone 8.1 will be previewed this fall with general availability expected in 2015.

The high-profile deal was announced in a joint conference call with Microsoft CEO Satya Nadella and Salesforce chairman and CEO Marc Benioff.

"This partnership is about extending the power of Salesforce, the world's number-one CRM platform, with Microsoft, the world's mostly widely used productivity solutions," said Benioff, who has previously been a frequent and caustic critic of Microsoft.

[Want more on Microsoft's recent deal with SAP? Read Microsoft Brings SAP Apps To Azure Cloud.]

Interoperability will enable joint customers to access, share, edit, and collaborate on Office content from within Salesforce and on Salesforce1 using Office Mobile, Office for iPad, and Office 365. A new Salesforce App for Outlook will be able to draw contact information from the email app, while Microsoft Excel and Power BI users will be able tap into and analyze data from Salesforce apps.

The integrations will "remove a lot of the friction that exists" between Salesforce and Office apps, said Nadella. And unlike third-party integration options that have been available at an extra cost, the new ties will be free to business subscribers to Office 365, Nadella said.

In a second aspect of the partnership, Microsoft announced it has renewed its commitment to use the ExactTarget Marketing Cloud for internal digital marketing -- an agreement that predated Salesforce.com's $2.5 billion, 2013 purchase of ExactTarget. In addition, Salesforce.com has agreed to keep running the underlying infrastructure of the ExactTarget Marketing Cloud on Microsoft SQL Server. Benioff said Salesforce will use Microsoft's Azure cloud for testing and development of ExactTarget applications.

Microsoft CEO Satya Nadella, left, and Saleforce.com CEO Marc Benioff.
Microsoft CEO Satya Nadella, left, and Saleforce.com CEO Marc Benioff.

As recently as January, Benioff described Microsoft as "a follower, not a leader," and he said the selection of a new CEO might be "too little, too late" to revive the company. But that was before the February selection of Nadella as the replacement for former CEO Steve Ballmer. Benioff cited the acquisition of ExactTarget and the choice of Nadella as two reasons for his change in tone and catalysts for the partnership.

"I've always wanted to have a closer relationship with Microsoft, and now we do because all these things have come together," he said.

The partners did not disclose the terms of the deal. They also did not explain why Salesforce.com apps will not be made available on the Microsoft Azure cloud -- a rumored aspect of the deal that was widely reported before Thursday's announcement. An Oracle-Microsoft partnership announced last year made Oracle apps available on Azure. And SAP apps will hit Azure in June through a separate deal announced earlier this month. But many Oracle and SAP apps started out on-premises, with versions running on Windows and SQL Server. Salesforce apps have never run on premises or on Microsoft infrastructure.

Why is Microsoft building closer ties with Salesforce when it competes with its Microsoft Dynamics CRM business? "There will be some areas that we will compete in," Nadella acknowledged, citing the inevitability of conflicts when operating a broad platform. Interoperability between popular applications is "what our customers demand of us."

Microsoft's continued use of ExactTarget is also somewhat surprising. In 2012 Microsoft acquired MarketingPilot as the underpinning for Microsoft Dynamics Marketing and campaign-management enhancements introduced as part of Dynamics CRM Spring 2014.

Supporting company strategy, Kirill Tatarinov, president of the Microsoft Business Solutions Division responsible for Dynamics apps, wrote in a blog that the deal is "an inspiring example of how two companies that compete vigorously on many fronts can also find ways to come together to benefit our customers." Tatarinov is clearly resigned to accepting the realities of why the deal is taking place.

"The reason that this relationship works is because Microsoft's core strategy is Windows and Office; that's where its revenue comes from," Benioff said. "Our core strategy is our CRM apps; that's where our revenue comes from. We both want to grow our revenues."

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Doug Henschen is Executive Editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data and analytics. He previously served as editor in chief of Intelligent Enterprise, editor in chief of ... View Full Bio

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D. Henschen
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D. Henschen,
User Rank: Author
5/30/2014 | 5:22:16 PM
Re: Salesforce came out ahead in this deal
Salesforce still doesn't have a real private-cloud option for privacy- and governance-sensitive organizations. That Superpod offering with HP is strictly for $50-million-per-year elite customers. Azure could be an alternative private-cloud delivery platform with rich integration options, but you are absolutely correct that that would be very complicated to pull off. As long as it's growting at a double-digit pace, Salesforce has no reason to look for more cusotmers on somebody else's platform.
Charlie Babcock
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Charlie Babcock,
User Rank: Author
5/30/2014 | 3:50:08 PM
Salesforce came out ahead in this deal
It was too much to expect that Salesforce.com CRM applications would run in the Azure envrionment. There are too many proprietary technologies involved. I don't remember seeing Force.com's Apex on the list of languages supported under .Net. In that sense, the Salesforce cloud gains more than Microsoft Azure from this partnership. Links to Office apps will make Salesforce CRM more useful and more deeply embedded in organizations--more competitive. Microsoft will get continued use by thousands of Salesforce customers of one of its oldest cash cows. That's fine, but what it needs are big name users on Azure.  If I were Benioff, I would be full of praise....  Salesforce came out ahead in this deal.
jagibbons
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jagibbons,
User Rank: Ninja
5/30/2014 | 12:35:38 PM
Re: Growing Respect for Nadella
A strong leader will know when it is time to sacrifice or downgrade your own efforts to join the efforts of a competitor who is wildly successfull. This partnership demonstrates that, as does the relase of Office apps for the iPad. Both will hurt sales of some Microsoft products and services, but will grow sales of other. That is smart business, and shows that the new regime in Redmond is serious about making positive moves to benefit the company.
Somedude8
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Somedude8,
User Rank: Ninja
5/30/2014 | 11:31:43 AM
Growing Respect for Nadella
I was a big skeptic of Nadella, but it seems like just about every week he does one more thing that just makes sense. In this case, backing integration of Office with Salesforce, which competes with part of the MS portfolio, previously would have been unthinkable. But in reality, its probably a very smart move.

+1 to Nadella for 'getting it'.
Laurianne
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Laurianne,
User Rank: Author
5/30/2014 | 11:09:40 AM
Re: Will "first steps" bring deeper partnership?
Doug, interesting insight re Benioff saying "first step." For him, this may be a case of keep your friends close and your enemies closer.
David F. Carr
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David F. Carr,
User Rank: Author
5/30/2014 | 10:46:46 AM
Not war or politics
When CEOs bicker and diss each other, and each other's companies, you could find yourself thinking they are mortal enemies and that the divisions run deep. But much as it can sound like it, this is not war or politics. If companies can find a way to make a buck together, they can toggle from enemies to friends just about instantly.
D. Henschen
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D. Henschen,
User Rank: Author
5/30/2014 | 10:22:29 AM
Will "first steps" bring deeper partnership?
At several points during yesterday's joint conference call with Microsoft CEO Satya Nadella, Salesforce.com CEO Marc Benioff used the words "as a first step," hinting that there might be more to come in this partnership. On Azure, for example, Benioff said Salesforce is exploring the use of that platform for things other than development and testing of ExactTarget applications (which have been built on Microsoft technologies since the start of that company). There's no telling where it might lead, but you get the feeling there will be more to it than accessing Office documents from within Salesforce and tapping into Salesforce data from within cloud, mobile, and desktop Office apps.
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