Enterprise software analysts and industry observers usually refer to the competition in the ERP and CRM space as essentially a two-horse race between Oracle and SAP. The breadth of applications in both vendors' stables, their collective R&D budgets, and the fact that these giants aren't shy about buying up the competition cements that market reality.

But watch out, SAP and Oracle. While continuing to bludgeon and attack each other as they |go after SMBs, both vendors now must look over their shoulders at hard-charging Microsoft and its burgeoning Dynamics set of business applications.

"Microsoft remains a relative newcomer to the business applications market," notes Warren Wilson, a research director at Ovum, in a report. "However, it is committing more and more resources to its Dynamics solutions, and its ability to integrate Dynamics with its ubiquitous Windows applications-especially Office-makes Microsoft a threat that neither SAP nor Oracle can afford to take lightly."

Thomas Wailgum recently talked with Chris Caren, general manager of product management and marketing for Microsoft's Dynamics line of ERP and CRM products. Caren described the overriding strategy for the Dynamics line and how the software will take advantage of users' familiarity with the Office suite. He also explained why he thinks on-premise and cloud computing options won't hurt Microsoft's business, and offered his take on how Microsoft is competing-and winning-against Oracle and SAP in midmarket and large organizations.

What's been Microsoft's strategy with Dynamics so far?

Whether it's us talking to our customers or analysts like AMR, or doing studies of the market, we view business applications-and I'd say this both applies to ERP and CRM-as long-existing categories of software that are woefully underutilized and underused inside of organizations.

I think AMR did a poll and found on average about 10 percent of employees are licensed to use a business application, and of those 10 percent, only about half actually access the application as part of their job. So, the footprint inside of organizations is incredibly limited.

Whether it's business applications or other categories of software like business intelligence, we really believe there's a huge opportunity to democratize the application and get it much more broadly used in organizations for both increasing the productivity of employees and letting them be more effective in their jobs. But also to give them, in the case of business applications, better information for decision-making-just to help them work a lot more intelligently and a lot smarter.