Microsoft Expands SaaS Footprint with Collaboration Tools

| Mar 5, 2008 | Application Infrastructure | Competitive Update

| Analyst: Brad Shimmin

Current Perspective: Positive
Vendor Importance: Very High
Market Impact: High

Event Summary

March 2, 2008 -- From its annual Microsoft Office SharePoint Conference, Microsoft announced that the company will offer Microsoft Online Services to businesses of all sizes, expanding its software-plus-services strategy. In support of this announcement, the company unveiled a limited beta trial of the new services: Exchange Online and SharePoint Online. The new services are scheduled to be generally available to businesses of all sizes in the second half of the year.

Analytical Summary

• Current Perspective: Positive on Microsoft for expanding its Microsoft Online Software (MOS) platform with a beta release of two single-instance, multi-tenant software-as-a-service (SaaS) offerings focused on collaboration and messaging. This announcement significantly strengthens the company’s software-plus-service market strategy, creating an SMB-capable SaaS correlate to the firm’s existing managed (dedicated) services for collaboration and messaging.

• Vendor Importance: Very high to Microsoft, because the firm needed to respond to a very strong trend toward subscription-based, hosted software as a means of reaching enterprise customers that are unable to afford or maintain on-premise equipment in support of basic corporate communications. Microsoft’s beta release of Exchange Online and SharePoint Online is important, as it also helps the vendor counter recent, high-profile moves made by IBM to create SaaS-based collaboration solutions for the mid-market.

• Market Impact: High on the application and data delivery market, which is expanding rapidly into SaaS-based solutions, either as direct offerings or as indirect, supportive offerings for SaaS providers. Microsoft’s Online Software solution, though limited to Exchange, SharePoint, and LiveMeeting (an existing service), straddles both approaches and gives Microsoft yet another entry point for a SaaS program that can leverage the firm’s large customer base to drive its integration-as-a-service (IaaS) offering (BizTalk Services) and its line-of-business offerings (Dynamics).

Recommended Competitor Actions

• All rival vendors should position ActiveMatrix 2.0 as an interim release rather than a major update. Certainly, version 2.0 moves TIBCO’s overall SOA vision forward with new entry points for customers, new interoperability with TIBCO products and improved Java/.Net capabilities via SCA support. However, ActiveMatrix, as defined by TIBCO, is still an evolving solution with a number of dependencies (both internally and externally) that have prevented the firm from reaching its stated vision more quickly.

• Rival SOA platform providers (including Oracle/BEA, Microsoft, IBM, and Sun) should productize use case-based solutions targeting specific customer entry points. This approach has already been adopted successfully by IBM (with its Portal products) and Software AG, IONA, and Progress Software (with their governance solutions) and represents a quick methodology for reaching new customers. Entry points of interest include governance, integration, high availability, security, and compliance.

• Rival SOA firms with strong event processing solutions (primarily Oracle/BEA and Progress Software) should seek out compatibility with leading server virtualization technologies and solutions from XenSource, VMware, HP, and Microsoft. As mentioned above, a converged virtualization and SOA-based business process optimization (BPO) for both service and server provisioning will soon become a necessity among larger customers steeped in SOA.

• Rival vendors with strong ESB/application server solutions (IONA, Sun, IBM, and Oracle/BEA) should consider building governance into these foundational solutions not as pre-configured add-ons but as intrinsic components, beginning with policy-driven integration and orchestration routines.

Recommended End User / Customer Actions

• Rival firms should point out that, while Microsoft’s dedicated MOS offerings are relatively mature, in that they have been operational since October 2007, this is the firm’s first official foray into pure SaaS hosting, provisioning, and management. Lessons learned with the former will not translate to the latter, and consequently the firm’s ability to establish a foothold in this market will require a great deal of time beyond the official availability date this summer/fall.

• Rivals should note that despite Microsoft’s proactive move to maintain good will among its sizable partner ecosystem for the SMB market, the company’s rapidly expanding datacenter offerings for mid-sized enterprises will create friction between Microsoft and its partners that currently offer or seek to build hosted solutions. In general, this represents a mixed benefit and issue. Given Microsoft’s increasing move to offer enterprise software offerings that include subscription services, the company will create both friction and opportunities for its broad collection of partners.

• IBM should move quickly to finalize its business model for Bluehouse (announced this January) in order to beat Microsoft to the punch in delivering a working SaaS collaboration solution. The two offerings parallel one another in terms of scope and target audience, but both are in the very early stages. In pursuing the e-mail messaging market, the first vendor able to garner the most impressive set of customer wins will certainly hold the advantage in what is right now a two-vendor race.

• With its established track record for managed services and rapidly growing OpenOffice customer base, Sun should move rapidly to follow Microsoft and IBM in delivering SaaS-based collaboration and productivity solutions based upon Sun Java Communications Suite and StarOffice Office Suite. Already the firm has partners such as Ulteo that have adopted OpenOffice to a SaaS environment.

• In positioning MOS standard, rival firms should be aware that while Microsoft is seeking to leverage Silverlight as the RIA platform of choice for RIA developers, the firm has chosen not to require this browser plug-in for MOS standard applications as a means to retain its foothold within the desktop. This may change, if the firm opens up Office to MOS standard. For now, however, Microsoft has chosen the high road with Silverlight.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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