How can you tell if Microsoft is really serious about a technology? If it begins using it internally.

Barry Briggs, the CTO of Microsoft IT, told me that many product groups at the company won't ship new applications to the market until the full version of their products have been thoroughly dogfooded--the unappealing term that tech companies use to mean that they use the product internally as part of the testing process.

Briggs fell short of saying that dogfooding products is sticking in his craw, but did admit that it represents a burden in terms of hardware, manpower and time.

"We try to be Microsoft's first and best customer," he said.

The upside, he said, is that his department is trying to live the Dynamic IT slogan that Microsoft is touting to its customers. "We're continuously being able to be more agile, flexible, responsive to the needs of our business partners," he told me.

Specifically, Microsoft has implemented MDM (master data management) internally, which Briggs said has enabled the company to get a more holistic view of its large corporate customers.

A data warehousing project called "My BI" provides role-based access to business analytics, also improving Microsoft's selling opportunities.

Microsoft is also dogfooding "Cloud CRM," the internal codename for a SAAS CRM application being developed for the commercial market.

Cloud CRM has also been integrated with Microsoft's SAP application, Briggs added. That's a prerequisite for any on-demand CRM product hoping to compete with Salesforce.com.

Briggs said that salespeople are adopting the new product at a rapid clip, but that implementations are still limited because Microsoft is still working to get off the hosted CRM application from a large, unnamed competitor.

This tells me that Microsoft is serious about rolling out a new SAAS CRM offering.

I know that Microsoft is already offering Dynamics CRM as a service, but it wouldn't be unlike Microsoft to offer more than one flavor of a given product. After all, it offers how many different file synchronization products?

And the Dynamics CRM Live offering is still a morass of contradictions. For starters, Microsoft says you can download a free 30-day trial, but then makes you jump through hoops (and speak to a sales rep) before you get a token giving you access to the trial.

That's the totally hopeless approach you'd expect from a company driven by the bottom line rather than customer experience, and is totally inimical to the experience you get from Salesforce, Netsuite or TomorrowNow, to name a few.

(Why on earth would Microsoft care who accesses a free 30-day trial? It doesn't make sense except that old habits die hard, and Microsoft is starting to look and behave like an old company in many respects.)

Microsoft Live CRM also continues to straddle the fence by maintaining both on-premise and on-demand versions of its code. Joshua Greenbaum lauds this so-called hybrid approach for giving customers choice, but it prevents Microsoft from achieving the economies of scale of a true multi-tenant system (and passing cost savings on to customers), and ensures that there are umpteen versions of the application in the market at the same time.

So it wouldn't surprise me if Microsoft soon introduces a new on-demand product.