In-Depth

Knocked a-SKU

Microsoft believes its SKU program for packaging services will see a payoff in three years. One down, two to go ...

• By Scott Bekker
• September 01, 2006

SKU is the standard abbreviation for "stock-keeping unit." Microsoft uses SKU as the name for this program to convey the idea of a consulting service package so dialed-down that it can be purchased off a price list.

Rick Devenuti, Microsoft senior vice president for Services & IT, introduced the SKU concept at the Worldwide Partner Conference (WWPC) in 2005. He talked about plans to take the repeatable intellectual property Microsoft develops in consulting engagements and package that with partner training that would allow partners to deliver the Microsoft-branded service themselves. Part of the attraction of the idea is taking the consulting IP gained in high-end enterprise engagements and making it available to smaller organizations.

"Frankly, it's been harder than we thought to put these SKUs together," Devenuti said in an update on the program during his WWPC keynote this year.

Asked later to specifically define the challenges, Devenuti replied: "I always am really optimistic about how quickly we can do things. I don't think I personally put enough definition in what we were trying to do. The SKU program takes great projects that have been done and really crystallizes what is repeatable. Any good solution is going to be customized. What's really difficult is taking that piece of IP and figuring out what will work everywhere. That has been what has been more difficult."

Other challenges include managing the IP, creating the new licensing models and defining how the business relationship between Microsoft and the partners will work.

Devenuti has a three-year plan to develop SKUs into a more substantial offering: "We're still investing and we've still got lots to learn in this area, but I'm convinced it's the right way for us to move forward."

IDC analyst Darren Bibby says the SKU program sounds like an interesting idea, but wouldn't be surprised if it continues to be a tough sell.

"I think this is perhaps a part of business that's more relationship-driven. It needs people. Trying to package it up might be tough for medium or smaller enterprises to take," Bibby says, adding: "Maybe the packages aren't resonating yet."