Partner Advocate

Push for Answers on Software as a Service

Partners have good reason to be concerned as Microsoft grows its SaaS business.

• By Scott Bekker
• June 01, 2006

When we started working on the article, a lot of information was coming out of Microsoft about this services push, including internal memos from Bill Gates and Ray Ozzie and the company's efforts on Windows Live and Office Live.

Although the memos were highly publicized outside the company, it was hard to tell at first how much momentum they had inside. Also, with the main memo coming from new guy and Chief Technical Officer Ray Ozzie, instead of Chairman and Chief Software Architect Bill Gates, who is the traditional sender of disruptive internal missives, it was hard to know how seriously to take the messages.

But evidence that the online-services initiative is real, and that the company is serious about change, keeps piling up. Recently, Fortune magazine ran an inside account in which key Microsoft executives spoke frankly about the business discussions and sense of urgency permeating the upper echelon at Microsoft.

A few details from the Fortune article bring sobering news for partners. Microsoft is looking seriously at providing hosted e-mail and file server capability to enterprise customers. And the company is looking at building up a global infrastructure of server farms that could support that business model. How serious is Microsoft? Ozzie has a 300-page printout on his desk detailing the locations of telecom and power sources around the world.

For Microsoft, the emphasis seems to be on matching Google and Yahoo. As big as Microsoft is its leadership is genuinely concerned about being outmaneuvered by its search-engine rivals. But just because Google and Yahoo are the ones in the crosshairs doesn't mean that partners won't feel the impact when big changes hit.

It's been apparent since last year that Microsoft is approaching small business customers directly online. With ad-supported free e-mail and Web sites for companies with 10 or so employees, the Office Live push threatens partners whose business relies on implementations at the smallest customer sites. The strategic fight with Google and Yahoo signals that Microsoft could also soon chase partners up the value chain when it comes to midsize and even enterprise customers.

You need to push hard for answers from your Microsoft contacts about how and when these services are going to be real. And you need to keep after partner executives to make sure they're thinking about ways for partners to fit into the picture. The Microsoft Worldwide Partner Conference in July would be a great place to start that conversation.