Microsoft Gets SaaS-y

Is Microsoft’s come-to-software-as-a-service invitation sincere—or just a token gesture?

IBM Corp. has it, Oracle Corp. has it, and so does SAP AG. Oddly, Microsoft Corp. hasn't shown a viable software-as-a-service (SaaS) strategy. That changed last week, when the company inched closer to SaaS relevancy by announcing new SaaS-oriented Office, e-mail, and SOA offerings.

It's been a long time coming. Redmond, more than any other prominent software vendor, has been glacially slow to come to terms with the SaaS revolution. With good reason: SaaS—at least as it's exposed by many providers—disrupts Microsoft's fat client software delivery model. In place of large, client-side operating system and application installations, SaaS substitutes an extremely thin (typically, Web browser-based) client experience.

Last week, however, Microsoft officials sounded like they'd officially made their peace with SaaS—although Redmond understandably positions software-as-a-service as a complement to (and not a replacement for) full-fledged clients.

"Vendors of point solutions can argue for one approach or the other, but either/or approaches don't address all of the technology challenges and opportunities in today's workplaces," said Jeff Raikes, president of Microsoft's Business Division, in an interview posted on Microsoft's Web site. "In addition to providing customers more choice, software plus services balance the massive power of the Web to connect people, devices, and information with the interactivity and performance of software on a machine with a powerful processor.

Microsoft's SaaS strategy—which consists of Microsoft Office Live Workspace, Microsoft Exchange Labs, and Microsoft Biztalk Services—doesn't quite give customers all of the features of client-side Office or server-side Exchange and BizTalk Server, of course. Office Live Workspace is designed to mesh with Microsoft's 2007 Office System. It uses a Web-based model to let people access documents online and collaboratively work with others. Microsoft's Exchange Labs offering provides a hosted framework for testing and developing next-gen unified messaging and communications apps. Microsoft positions its final SaaS entry—BizTalk Services—as a building block service that lets developers quickly build composite applications.Add it all up, Raikes argues, and you have a best-of-all-worlds approach to SaaS that simultaneously yokes together client software (e.g., Excel and Word), server-side software, and SOA Web services. That it also plays to Microsoft's client-side strengths is no accident, either.

"As a company, we believe this combination will become increasingly essential as digital technology continues to grow, and as people rely on more and more digital devices at home and work," he argues. "We believe that the future of technology at work will be a combination of local software on client PCs or on-premise servers, along with services available in the 'cloud.' Our approach is to give customers the choice, flexibility and power of both software plus services."

For most customers, Raikes says, pure SaaS simply isn't sufficient: "Think of it as a continuum, ranging from pure software to pure services approaches. Most customers will be somewhere in the middle. Different customers will make different decisions and even customers with similar situations will make different decisions for what they want on-premise and what they want as a service."

Long Overdue

Industry veteran Charles King, a principal with consultancy Pund-IT, says Microsoft's come-to-SaaS moment is long overdue. As for why Microsoft has chosen to embrace SaaS, King cites a number of possible explanations. "For years, many … criticized the company for maintaining Office as a continually expanding monolithic entity that offered more features than most customers used or wanted," King explains. "[But] competition in the space is becoming heated, with standalone offerings, such as Star Office, becoming more capable, and online solutions, like Google Apps, threatening to change the way people create, use, and access documents. Even mature alternatives, including IBM's Lotus, are getting some online mojo via the latest free, downloadable Symphony solutions."

How best to explain Microsoft's it's-about-that-time foray into SaaS? King sees it as a combination of two things: increasing market pressure (Office competitors plus a host of Web 2.0 contenders) and strategy. Microsoft, after all, doesn't do anything without first having a strategy.

"Yes, alternatives to the company's Office suite are becoming better and brighter, and Google's interest in productivity is predicatively unsettling. Moreover, a free version of IBM's Lotus, a well-established solution with a solid reputation … and millions of existing users, could put real pressure on Microsoft," he acknowledges. "As a result, heading off such threats before they become full-blown makes sound business sense by any measure."

King also sees Microsoft's SaaS announcements as indicative of a solid strategy.

"[T]hese new enhancements to Office also qualify as natural steps in product evolution. Businesses were moving collaborative activities and processes online long before Google Apps appeared, and IBM's Lotus was a solo instrument prior to Symphony. In other words, Microsoft's latest moves can be seen as a proactive response to the changing requirements of its customers rather than a reactive move against competing offerings," he argues.

Ditto for Microsoft's Exchange Labs and BizTalk Services entries. "With these programs, the company also aims to ensure the comfort and cooperation of numerous developer partners who will be instrumental in creating and delivering next-generation messaging, unified communications, and composite solutions," King points out. "Therein lays the biggest rub for any Microsoft competitor: the potential of Office to provide a base for numerous incremental or entirely new products whose functionality will likely outstrip other solutions for some time to come.

"Microsoft has taken some heat for its inability to move rapidly or take advantage of quickly emerging opportunities, a not-unusual situation for an organization of its size. On the other hand, once the company does get rolling, they often win the day. The new Office Live Workspace and related plans suggest that Microsoft is taking seriously challenges to its position by crafting a strategy aligned with the company's wider efforts."