Analysts estimate that the hosted CRM opportunity could be as much as 33% of the total CRM market by the end of 2009.

This figure increases if you follow the hype of some of our software as a service competitors.  Many CRM vendors now provide a hosted SaaS offering as well as the traditional on premise in-house deployment method.  However, how many provide the ability to deliver a flexible deployment model of in-house, externally hosted SaaS or internally hosted (and yet outsourced) - all from the same code base?

With our recent announcement of Dynamics CRM 3.0 Service Provider Edition we are in a pretty unique position.  Dynamics CRM delivers the flexibility to deliver multiple models all from the same code base. 

Why is this a such a big deal?  From an end customer perspective you can put your toe into the CRM water with a rented per user / per month system (which you can pay for via your opex rather than capex) and get up and running with one of our hosting partners very quickly.  We also provide a flexible approach to integration with your existing infrastructure - e.g. your own Exchange system, an outsourced hosted Exchange system, no Exchange system..etc.  Another cool thing is the ability to use the Outlook integrated CRM client in a more loosely coupled mode, even with offline functionality.  Flexibility here is the key.

So what happens if the customer decides one day that this CRM system has to move inside the firewall and be delivered in house (as opposed to SaaS)?  Well many of the other CRM vendors customers would be faced with what can only be described as a "disparate systems migration project" as if between completely different CRM systems.  That is effectively what they are.  Many other vendors in-house CRM and hosted CRM offerings are exactly that - completely different systems.  This is not so with Dynamics CRM Service Provider Edition - it is effectively the Professional edition of the same product but with some changes to deliver a hosted model and flexible infrastructure choices.  The migration from hosted Dynamics CRM to on premise Dynamics CRM is as simple as backing up data and customizations and restoring them on the new in-house implementation. (Or vice-versa as could be the case). Not a migration between different systems, with different data models, different user interfaces and different features / functions.

What does this mean to an ISV?

An ISV can develop an application or a complete vertical solution and deliver that to its customers as an on premise or SaaS offering all from one development effort on a single code base.  A solution developed on Dynamics CRM 3.0 Professional Edition can be deployed on Dynamics CRM 3.0 Service Provider Edition.  Effectively this gives the customer and the ISV choice.  Many ISVs are currently considering whether to follow the current market trend of SaaS and as they do so they are limiting their platform choices – or they are creating extra development effort for themselves as they develop the same solution for multiple “different” platforms.  By choosing to develop a solution on Dynamics CRM 3.0 the ISV can provide their solution in many different delivery models from one code base.

Check out http://www.microsoft.com/dynamics/crm/product/hosted.mspx for more details.

Take a look at http://www.microsoft.com/dynamics/crm/partners/hosted.mspx for details of some of our CRM hosting partners.