Salesforce has been a leader in customer relationship management (CRM) software for decades, but some analysts suggest that Microsoft is in a position to make gains and overtake the SaaS giant over the next three years.
In 2011, Microsoft started looking like a serious contender in the CRM space, following the launch of Microsoft Dynamics CRM Online 2011. The CRM software was introduced at $34 per month, a seemingly better deal than the Salesforce complete CRM which was offered for $65 per month as their most basic option. "Oracle and Salesforce have strong CRM solutions, but the aggressive pricing from Microsoft will cause buyers to give Dynamics CRM 2011 a serious look," said Forrester Research analyst Bill Band. This signaled new competition with CRM leaders Oracle and Salesforce.
Now, almost nine years later, Microsoft has emerged as a contender to topple Salesforce from the top spot.
According to a study by Synergy Research, Microsoft began to dominate the fragmented SaaS market in 2019, and secured 15% of overall SaaS revenue, compared to Salesforce’s 14%.
Notably, this shift from Salesforce to Microsoft is driven by the companies’ key differences. Microsoft has over a billion enterprise users which span productivity, cloud, and applications. The tech giant’s scope is global, with its DNA present in nearly every enterprise around the world. The company has also been propelled forward thanks to the proliferation of Microsoft Teams, which has grown from 11 million daily users to over 75 million users, as the global pandemic accelerated digital transformation. Teams is free and installed by default with Office 365, which could partially explain that 64 million user jump now that more people are working from home.
Microsoft is a good bet, and while its Dynamics CRM is secondary to Salesforce, the SaaS giant needs to improve its PaaS (platform as a service) solutions. As a PaaS, Microsoft has the upper hand due to its seamless integrations.
There’s also Salesforce’s price point - which requires an entire year to be paid upfront - that gives Microsoft an undeniable edge. Add to that a software suite that is simple to use, albeit with fewer options, and it’s likely to become the go-to platform for small businesses.
There is no doubt that Microsoft is making strides, but the question is whether or not the tech giant is primed to overtake Salesforce, and if so, how soon?