Enterprise customers continue to be frustrated by a lack of clarity or momentum in key areas around business productivity 'front office' strategy from Microsoft; partners are picking up the slack but some big questions are being asked this summer
Enterprise anxieties around Microsoft seem to have increased rather than decreased with the confirmation of their Yammer purchase for an astronomical 1.2 billion dollars, which from various conversations I've had over the last few days appears to be fundamentally about sending positive messages to Wall Street about Microsoft strategic direction.
Microsoft CEO Steve Ballmer is famous for his impassioned 'developers, developers, developers' performance in the mid nineties, but the Yammer marriage sends a message that it's cheaper to raid the colossal Microsoft bank balance than attempt to develop this type of technology in house, which is not so great for enterprise customer perceptions.
We now know that Kurt DelBene, who runs the cash cow Office division at Microsoft, is in charge of Yammer's future. Delbene, who rebuilds and races classic cars in his spare time and therefore has a special place in my heart as someone who knows how things are put together and work, is upstream of the digital filing cabinets Sharepoint division, who supply file storage for all the offline documents Office users produce.
As I wrote previously Sharepoint has been the 800 pound gorilla success story in the fremium market, having got onto enterprise servers as a freebie for the last ten years and been 'adopted' by users who have needed somewhere to keep their files, and to create simple 'team site' hubs.
This approach continues to be the de facto way of doing business in the western world, but importantly businesses are finally starting to recognize how chronically inefficient it is. (In my extensive experience use models are not age related but more defined by individual understanding and confidence in digital technologies and more of a personality type issue around sharing information with others).
Where individual document creation is the domain of the information hoarder, the Enterprise 2.0 and social business/enterprise movements have created a huge number of alternative ways of working which are now hitting mass acceptance and maturity.
The battle for the 'front office' (which in reality is stateless and as likely to be on a mobile device or in a coffee shop as a cubicle) has really heated up and Microsoft's understanding and belief in Yammer's viral adoption successes were almost certainly a progenitor for their acquisition decision.
The challenge going forward is that Microsoft are still very much seen as being in disarray: their mobile strategy continues to be a source of great anxiety to enterprise provisioners, who have seen the email-centric RIM 'Crackberry' platform crumble and are now grappling with device and operating system fragmentation and 'bring your own device' complexities. Windows phone, which should have been a natural fit in this space, just hasn't performed and the rumblings about Metro are doing nothing to allay concerns. Close partner Nokia is still underperforming.
Salesforce have lead the charge in capturing the 'front office', with the idea of the cloud 'new wave' vendors providing the agile and attractive user interface to the world whether employees or customer, and the 'old guard' ring fenced and running their complex old servers and systems, to be drilled down into to expose relevant data in context. This may work with SAP and Oracle who are arguably behind in this area and are frenemies in different areas with bigger ERP fish to fry, while IBM have a reasonably strong and credible collaborative ecosphere around their offerings.
Microsoft are currently looking increasingly exposed in this 'front office' area, and the gradual erosion of what I've been calling the digitized 'document creation, postal and filing' model for the last three years, and which has historically been the Office cash cow, continues to crumble. Fortunately for Microsoft there is so much noise, half baked organizational ideas and fragmenting 'social' technologies out there currently that the threat is still not as focused as it could be.
The rich partner ecosphere Microsoft have supported is also in disarray in some areas; while the Surface tablet looks a terrific piece of industrial design it has arguably alienated their hardware partners at a time when the Windows operating system has many question marks around it. The Surface tablet could be a powerful tool in the Microsoft enterprise arsenal if they get the positioning right with IT provisioners, but price point and operating system are going to be critical issues.
The ecosphere around Sharepoint as a foundation for social enterprise computing is led by Newsgator, who have been adding the missing components to create a social platform out of Sharepoint for years. Talking to CEO JB Holsten earlier this week the Yammer move was seen as complimentary to their products and work. At last week's Enterprise 2.0 conference both JB and Ramin Vosough of Neudesic were on my panel 'Enterprise 2.0 and Social Networking’s Influences on Human Resources' along with Yammer's VP of business development An Le and Lisa Sterling, Head of People Engagement, Ultimate Software, who are a Yammer partner.
At that point in history earlier last week the Yammer/Microsoft marriage was conjecture, but the dynamics even then were interesting. Companies like Ultimate now have to make hard choices about continued alignment with Yammer, while partners who rely on Microsoft's vast installed base for prospects and clients are always wary of Microsoft's notorious 'embrace and extend' co-option of successful business categories into their core business offerings.
Wall Street have a limited understanding of the value of social software mapped primarily to seat license sales, but of course the greater value to the purchaser is in what the software tools can help them deliver, which is primarily an organizational problem.
Larry Dignan points out here on ZDNet that "Microsoft paid $1.2 billion for Yammer. $1.2 billion is 25 percent of what the total social enterprise software pie will be in 2016" based on speculative IDC projections.
One thing seems clear around Microsoft's core domains in a business world where it's increasingly unclear where vertical sector borders begin and end: the three year product refresh cycle cadence they have trained their customers to work around are an anachronism today, where for example Salesforce have three major platform/product updates a year.
Given that past purchases have largely disappeared without trace - promising natural language search engine Powerset were bought for 100 million USD in 2008 while Fast Search & Transfer ASA (FAST) were also bought in 2008 and are now an option for Sharepoint search - it seems unlikely that Yammer will retain much identity or momentum in the very fickle world of freemium social interactions going forward. The cultural fit to the consciousness of the average Microsoft enterprise buyer is still an odd one from my experience, although that may change.
Microsoft Dynamics CRM would probably benefit from a Salesforce Chatter-like Yammer integration, but that doesn't appear to be in the tea leaves from the Office division centric messaging so far, despite everyone else and their brother knitting social communication channels into their enterprise products, particularly around specific processes. This type of engineering activity may impress the financial markets for a couple of quarters but the acid test is whether there are viable use cases and therefore revenue from customers. Right now we're arguably heavy on enabling technologies in enterprises but light on effective use modeling, which may cause some disillusion amongst those who have bought into the literal idea that software will create new work processes (through 'adoption' etc).
This is arguably a real moment of truth for Microsoft with their enterprise customers, and to a lesser extend the more fluid small and medium business world where Office 360 has been doing well. Videos like the one below depicting exciting new ways of working in a futuristic world comfortably far into the future are pure conjecture and far enough out to be irrelevant. What customers want to know is what their future look like over the next eighteen months, and the Microsoft vision is far from clear to help guide those decisions.