The Windows Observer--Businesses Targeted by Microsoft's New 'Online' SaaS Offering

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Volume 4, Number 36 -- October 3, 2007

Businesses Targeted by Microsoft's New 'Online' SaaS Offering

Published: October 3, 2007

by Alex Woodie

Microsoft will be selling businesses software as a service (SaaS) access to several of its server products, including Exchange, SharePoint, and Office Communications, as part of its new "Online" offering. The software giant also made an addition to the second fork of its SaaS strategy, the consumer- and individual-focused "Live" brand, with the debut of a free collaborative productivity service called Office Live Workspace.

Microsoft first outlined its Live offerings, including Windows Live and Office Live, about two years ago. At that time, Microsoft had just hired Ray Ozzie, the creator of Lotus Notes, and expectations were running high that the software giant would finally start moving its products online so they could better compete with new Web-based offerings from Google. However, industry watchers have been somewhat disappointed with the Live offerings, with Microsoft's slow-footedness in bringing out new solutions, and the company's seeming hesitation to cut into the cash-cow that is its traditional Office business.

The growth of Web-based productivity offerings shows no sign of letting up, and competitors continue to chip away at the Office juggernaut. Just two weeks ago, Google launched a new service allowing people to view presentations online, aka Web-based PowerPoint. This week, Adobe acquired Virtual Ubiquity and its Buzzword online word processor. And IBM has been making a lot of noise lately about Lotus Symphony, its free suite of productivity programs that's based on the open source OpenOffice suite. One could say the barbarians are already at Office's gate.

But Microsoft has a strategy for dealing with these competitive Web- and open source-based threats. Whereas Google leads with its Web-based offerings and offers downloadable software as a secondary incentive, Microsoft plans to continue leading with its traditional software, and lay Web-based services on top as a sort of value-add. That overarching strategy, which Microsoft calls "software plus services," changed a little with Sunday's announcement.

Microsoft is taking a similar strategy in dealing with the burgeoning SaaS market for enterprise software. As part of its new Online offering, organizations with 5,000 or more seats to fill can pay Microsoft or one of its partners to run Exchange Server, Office Communication Server, or SharePoint Server for them. One of the truly beneficial aspects of these Online offerings--and an extension of its "software plus services" strategy--is that customers can move back and forth between running the software themselves and paying Microsoft or one of its partners to host it for them. When they choose the hosting option, it takes away the pressure of building for scalability and high availability, while still allowing them to manage their implementation.

CRM will soon be added to the list of products that run in a traditional hosted or SaaS model. This will be one of the features of "Titan," the codename for the next release of Dynamics CRM. While Microsoft didn't say when Titan will go gold, it did say that more than 100 customers are using the SaaS aspect of the product, called Dynamics CRM Live, as part of an "early access" program.

More pre-GA work will go into hashing out how Microsoft's "unified communications" strategy (in other words, blended access to e-mail, IM, video streaming, and IP telephony) will play out in the real world through new "Exchange Labs" that Microsoft announced this week. These Exchange Labs, which will be installed in select universities and school districts around the country, will provide an R&D test bed for the next generation of unified communications, according to Microsoft

Microsoft also lumped BizTalk Services, the new "software in the cloud" incubation project the company announced at its Tech Ed conference in June, into the Online arena. Currently, Microsoft is working on two capabilities with BizTalk Services: a federated identity service and a firewall friendly messaging service. While Microsoft announced a new code update to the project this week, details about general availability, pricing, and licensing won't be disclosed until later this year, the software giant says.

On the desktop side of things, Microsoft announced its new Office Live Workspace, which delivers new Web functionality for existing Office users. The new offering, which Microsoft will provide free of charge, will let Office users store up to 1,000 Office documents on Microsoft servers, and access them whenever and wherever they need, using the Web.

Office Live Workspace users will also be able to create a password protected online workspace on the Web that they can invite others to join. This will help to eliminate the e-mail-induced problem of multiple, out-of-date versions of documents, Microsoft says. Office Live Workspace will support Word, PowerPoint, Excel, and Outlook. Users can pre-register for the Office Live Workspace beta at www.officelive.com.

As part of its SaaS roadmap and strategy update, Microsoft gave a new name to Office Live, the collection of tools and services that became available about 11 months ago for helping small businesses set up a Web site and a Web presence. The new name is Office Live Small Business, which more accurately describes what the tools and services do.

Jeff Raikes, president of the Microsoft Business Division, discussed Microsoft's new service roadmap in a Q&A posted to the Microsoft Web site. "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. Think of it as a continuum, ranging from pure software to pure services approaches. Most customers will be somewhere in the middle."