The Microsoft-LinkedIn CRM Connection

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With its US$26 billion purchase of LinkedIn, Microsoft may be setting itself up to tackle Salesforce head-on for CRM dominance.

The purchase, announced Monday, also might help Microsoft compete more aggressively with other major CRM providers, such as SAP and Oracle.

The LinkedIn purchase "is key to our bold ambition to reinvent productivity and business processes," CEO Satya Nadella told Microsoft employees.

How people find jobs, build skills, sell, market and get work done -- and ultimately, achieve success, "requires a connected professional world," he said. "It requires a vibrant network that brings together a professional's information in LinkedIn's public network with the information in Office 365 and Dynamics."

This combination will enable "new experiences, such as a LinkedIn newsfeed that serves up articles based on the project you are working on, and Office suggesting an expert to connect with via LinkedIn to help with a task you're trying to complete," Nadella suggested.

The acquisition will create new opportunities for monetization through individual and organization subscriptions and targeted ads, Nadella noted.

Kurt DelBene, Qi Lu and Scott Guthrie will lead Microsoft's work on integrating LinkedIn's technology with Microsoft Dynamics and Office 365.

By acquiring "a social networking property with actual business value and clear links with CRM," Microsoft gains "a huge stream of unstructured data about business professionals," said Rebecca Wettemann, vice president of research at Nucleus Research.

"Leveraged within CRM efficiently with Azure machine learning, [this] could be really powerful for business-to-business sales and marketing," she told CRM Buyer.

"One of the biggest uses of LinkedIn is to help sales people find the right people and organizations to approach," noted Denis Pombriant, principal at Beagle Research Group. "I don't think that's going to change."

Advertising "is really in the business-to-consumer space," he told CRM Buyer.

So, using LinkedIn to serve up ads, as Nadella foresees, "will be a new twist," Pombriant said. "I think there's an opportunity there that could be a very good approach."

Whether Microsoft can then tackle Salesforce is the question.

"Salesforce has the dominant position in CRM, and in order for another company to overtake them, they have to falter and do something silly," Pombriant maintained. "I don't see that happening."

Further, Salesforce "is moving aggressively in the app development space to compete with Microsoft there," he said. "At the end of the day, I think we'll see everybody competing with everyone else for everything until there's a shakeout."

Microsoft's mission is "to empower every person and every organization on the planet to achieve more," Nadella repeatedly has emphasized, and the purchase of LinkedIn appears to be in line with his vision.

It also might be tied to Microsoft taking its partnership with Xiaomi worldwide. Under that agreement, Xiaomi will ship Microsoft Office and Skype on its Android devices.

It's possible that through the partnership Xiaomi could offer corporate customers in the Asia-Pacific region -- where it is strongest -- access to Microsoft Dynamics CRM on mobile devices.

"Ultimately, the relative success or failure of the acquisition will depend on what Microsoft brings to the table -- not just what it gets from LinkedIn," Nucleus's Wettemann said.

"This means going beyond the shiny-object syndrome that sometimes happens with things like big data," she explained, "to identify how Microsoft's analytics and machine learning capabilities can be applied to LinkedIn in ways that have a direct impact on sales, in the case of CRM."

That should be done "in a way that's applicable not just in Microsoft labs or with developers," said Wettemann, "but with a broader business user population. Execution is everything."

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

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