Just two months after announcing the integration of its CRM and ERP platform under the Microsoft Dynamics 365 umbrella, Microsoft this week announced a six-year agreement to deploy the service to HP Inc.’s ranks.
Under the agreement, HP will deploy the Microsoft Dynamics platform — including Azure, Office 365 and other solutions — to tens of thousands of its employees. The move will integrate HP’s sales, marketing and service operations on a common cloud platform.
“This brings us a cloud-based solution that delivers a more effective and efficient collaboration engine across our businesses,” said Jon Flaxman, chief operating officer at HP.
HP Restructuring
The deal comes months after Hewlett-Packard announced plans to accelerate layoffs in the aftermath of last year’s division of the company into two separate firms: HP Inc. and Hewlett Packard Enterprise. HP plans to cut 3,000 jobs by the end of 2016, rather than spreading the cuts over a three-year period, as originally planned.
Salesforce, considered the most important obstacle to Microsoft’s expansion in the CRM and ERP business, said it “remains committed to the success of HP Inc. as a customer and partner,” in a statement provided to CRM Buyer by spokesperson Laura Szatkowski.
The move is a sign that despite their age, these two tech behemoths will fight aggressively to stay competitive with their younger, leaner and more nimble competitors, suggested Jeffrey Kaplan, managing director of ThinkStrategies.
“Microsoft and HP have been longstanding partners who are both moving aggressively to regain their prominence in a rapidly changing market,” he told CRM Buyer.
Collaborative Cloud
Microsoft will provide Office 365 to help HP’s worldwide sales, service and marketing professionals remain productive in a more collaborative environment, the companies said. Power BI will help them gain important insights and predict customer needs, and Azure will give HP’s IT organization access to an open hybrid cloud that allows for new capabilities at a lower total cost of ownership.
Microsoft’s acquisition of LinkedIn will be important to this deal, according to Kaplan, as it will help give HP employees the ability to generate new business leads.
The agreement probably has more positive significance for Microsoft than negative consequences for Salesforce or Oracle, noted Michael Jude, a program manager at Stratecast/Frost & Sullivan.
“Salesforce is the dominant player in CRM, and Oracle has a huge chunk of the database market tied up, so they won’t feel this much,” he told CRM Buyer. “Microsoft, on the other hand, can claim a major win and will undoubtedly leverage this in its marketing and sales.”
It’s difficult to know exactly what led HP in the direction of Microsoft, but cost likely was one of the major factors, said Denis Pombriant, managing principal at Beagle Research.
“In a situation like this, it’s not unheard of for a vendor to try to discount deeply to gain a marquee client,” he told CRM Buyer.
HP has a relationship with SAP, he noted, but many SAP users are deploying other products — like Microsoft Dynamics and Oracle’s NetSuite — to meet the needs of regional offices.
“In such a situation,” Pombriant said, “Microsoft would obviously have an advantage.”
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