Microsoft And Salesforce Bury Hatchet In New Partnership

They started the week as bitter rivals, but Microsoft and Salesforce stunned the tech world Thursday by announcing a partnership intended to integrate the world’s leading customer relationship management platform with the world’s leading productivity solutions software.

In a lovefest of a conference call, Salesforce CEO Marc Benioff and Microsoft CEO Satya Nadella put the bad blood between the two companies to rest, saying they were eager to work together to connect Salesforce’s CRM apps with Microsoft Office and Windows. During the call, the two CEOs heaped praise upon each other's companies, almost as if Microsoft had never banned Salesforce from attending its Worldwide Partner Conference.

"Customers need and they want us to work together," Benioff told journalists and investors on the call. "They want this partnership badly."

[Related: Salesforce Q1 Earnings Just Beat Expectations, Forecasts Strong Growth ]

Nadella and Benioff told investors that Salesforce will extend use of Microsoft's SQL Server and Office 365 and bring its top-selling CRM applications to Windows phones and desktops.

"The simple truth is that we wanted to bring more value to our mutual customers and be each other’s customers in relevant areas,’ Nadella said.

But the unexpected announcement fell short of what Bloomberg News reported earlier that morning of a more ambitious cloud pairing that would see Salesforce apps engineered to run on Azure, Microsoft's Infrastructure-as-a-Service cloud.

The two CEOs said that while they are partnering across many areas of their respective businesses, reports of such a pairing were premature.

Benioff only said that Salesforce will start using Azure as an internal platform for development and testing while it starts "researching other areas it can use Azure.’

Jeff Davis, president and CEO of Perficient, a St. Louis-based consulting firm that has strong partnerships with both Microsoft and Salesforce and substantial expertise on each platform, told CRN he was thrilled with the announcement of the partnership.

"Our enterprise customers oftentimes have significant investments in both vendors' technologies, and this closer coupling will enable us to integrate tools and systems more quickly, driving additional solution value,’ Davis told CRN.

Benioff said it shouldn't matter to customers where its CRM software actually resides in the cloud, or even what database the company uses. All they need to worry about is their user experience.

The deal surprised some industry analysts because Microsoft offers Dynamics, a rival CRM application that can be hosted in on-premise IT infrastructure or in the cloud. But Nadella said the partnership won't interfere with the success of that offering.

The partnership represents investment in both companies' core businesses, which is necessary to grow revenues, Benioff said.

"We think Microsoft is doing a lot of the right things to encourage customers to move to the cloud,’ Benioff said.

"I’ve always wanted to have a closer relationship with Microsoft, and now we do,’ Benioff said.

Given the contentious history between the two companies, the deal indicates the continuation of a major strategic shift Microsoft has undertaken under Nadella toward accepting interoperability with other vendors.

Last year, the company announced a cloud partnership with Oracle, another longtime rival, in which Oracle certified its database products to run on Azure.

The Salesforce partnership has already yielded at least one new customer for Microsoft.

Benioff has often said he relies on mobile devices to conduct business.

"I run my business from my phone, and I’m going to be running my business from my new Windows phone," the Salesforce CEO said.

PUBLISHED MAY 29, 2014