Office productivity: Has Microsoft blown it?

Microsoft has dominated the 'office productivity' tools market for decades and is a de facto way of working in most companies. Having significantly held back innovation in the last 10 years, Office is arguably reaching the end of its useful life as modern digital tools make it look like an old bureaucratic anachronism.

I've now written about and discussed in strategic meetings for years how most electronic 'office productivity' software is essentially a digitized version of Victorian era work practices. Documents were created on desks with ink wells, posted to people and filed in filing cabinets. Professions that are essentially document driven, legal and accountancy for examples, are also hugely influential in shaping and arguably holding back the maturation of business cultures.

Microsoft innovated back in the 1980's by creating the most successful electronic version of these traditional ways of working, which grew to be joined at the hip to the Windows operating system in the pre-internet era. Add in the conversion of the old meeting slide carousels into Powerpoint and you could create and save everything to the C drive of your personal computer ...all so much more agile than the old mainframes people used to have to endure.

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Microsoft Office quickly became as much a part of office culture as beige cubicles and office parks, and with the coming of Sharepoint at the turn of the century (trojan horsed free into many companies) we entered the golden age of digital filing cabinets to keep Office docs in. This was genius business strategy by Microsoft: for decades Office has been the golden goose and the de facto business standard 'productivity' tool... extending it to Sharepoint storage infrastructure created another gusher of revenue.

Throughout the dot com era, the web 2.0 read/write web era and the explosion of mobility and digital first strategy Microsoft have arguably held the office productivity market back in order to protect the Office golden goose revenues to spectacular financial success. Waves of innovative collaboration software have attempted to loosen this business culture chokehold, with minor incursions made by 'Storage as a Service' vendors, although that area has become a costing race to the bottom.

This brilliant business strategy and marketing hypnosis of the business world by Microsoft is now showing some signs of wearing off as the digital era matures and more people finally start to realize how anachronistic and bureaucratic document driven workflows are. Additionally, in an era of mass automation, labor intensive single seat licenses for Office are increasingly out of place, despite the various Office 365 cloud versions, purchase of Yammer and so on.

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Despite this Office remains the 800 pound gorilla and like Goldmine, the old offline sales CRM tool, a highly personal set of tools which are ideal for knowledge holding and office politics. The question is how much longer this can endure as Microsoft's power wains at the center of the office productivity business world. Windows phone has failed - it wasn't even mentioned in the early stages of yesterday's earnings call - and Lync/Skype are old hat in unified communications. Dynamics was until recently a very small facet of Microsoft's world but is being beefed up to compete in the wide open customer relationship management world, Azure is doing well in the cloud infrastructure world but in a very fast moving and quickly evolving space with tight margins.

After years of stifling innovation in collaboration, the pace of digital may have finally caught up with Microsoft and left them exposed for now. Despite sitting on enough money to 'fail uphill' for years this is a critical period for them and for innovation to finally be allowed to flower in the collaboration/office productivity space which is a vitally important attribute of successful digital transformation strategies, attendant efficiency gains and cost savings.


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