The Microsoft Office System: Better Software at the Cost of Choice

The Issue: Microsoft’s Office System with SharePoint puts powerful software into employees’ hands, but companies must control its proliferation and set policy for use to avoid the greater cost: the ability to choose.

My favorite moment from the Microsoft Analyst Summit a year ago occurred when someone asked Steve Ballmer how Microsoft would address the Linux and open source threats. Ballmer had been uncharacteristically subdued until then, fielding analyst questions in a relaxed, fireside chat tone; but the question changed that. Ballmer blurted, “How are we going to address it?! We’re going to make better software!” More ranting, pacing, and sweating, and a much more exciting event commenced.

The analyst was referring to the server business. At the time, few would have questioned Microsoft’s continued desktop dominance. But as companies seek to bring employees in line with the enterprise as they address compliance and security issues, as they try to lower operational costs, the desktop is coming under new scrutiny.

Thin client is back in vogue, this time with less emphasis on hardware savings. The motivation is more about centralizing security and administration enforcing compliance, lowering software costs, and helping employees, partners, and customers work together toward common goals.

The Office System: Better Software

As Ballmer proclaimed, for the information workers it appeals to, the Microsoft Office 2003 System is undeniably better software. We’re not sure it warrants the “Great Moments at Work” tablet-spinning celebrations that are interrupting popular sporting events lately, but it’s better.

SharePoint, embodied in SharePoint Portal Server and Windows SharePoint Services, is the crux of Microsoft’s collaboration strategy, extending Office by offering document sharing and collaboration features and serving as a platform for integrating and extending other enterprise applications.

The second version of SharePoint is reportedly selling rapidly, with Microsoft reporting more than 25 million seats already sold. The many users we’ve talked to are quite pleased with the product; many have already been able to measure Return on Investment (ROI).

Low cost is sunk cost

Incrementally, in view of bundling deals and in light of sunk Microsoft costs, the collaborative Office System 2003 seems inexpensive. Still, it might surprise some companies that implementing the core elements of Microsoft’s collaboration vision--including SharePoint and Live Communications Server, along with Office, Exchange, and Windows upgrades--will cost a company of just 5,000 users at least $2.5M in the next few years.

Training cost is low, as Microsoft makes its software usable at every level. Change management and adoption, a frequent point of pain for companies implementing portals or extending enterprise applications to more end users, becomes an easier effort.

But the perceived low cost is a sign that many companies have gone past the point of no return with Microsoft already. Low training cost is not as attributable to intuitive software as it is to your employees’ unavoidable familiarity with software that’s actually quite complicated. (Try teaching it to your grandmother). The software is designed to be just good enough, and inexpensive enough, and convenient enough, and easy enough to use to outweigh concerns about further Microsoft lock-in.

Widespread adoption has its costs

The new Office System and SharePoint work best for companies willing to trust employees and willing to cede control to business users. Unfortunately, most must also be willing to accept the possible proliferation of content and the building of customizations and workflows that are bound to be outdated someday, either as a result of inevitably updated architectures (remember, despite delays, Longhorn is coming) or the departure of the employees that created them.

Theoretically, the risk is mitigated by new openness and interoperability. But while Extensible Markup Language (XML)-based Word and Excel and a new forms application, InfoPath, should offer all kinds of additional flexibility and customizability, they’re still intended to urge customers toward more Microsoft investment, whether in Office or its accompaniments. Microsoft’s recent patent application for its custom XML document format isn’t the act of a company committed to openness.

It is instead a sign of a company threatened by competition; in this case, from open source. A viable Linux desktop, including e-mail and office productivity, is now inevitable, even if remote for U.S. enterprises. Novell and HP revealed only last week an agreement to sell notebooks and desktops loaded with Linux and the Open Office and Ximian groupware distributions. Large organizations, most notably in the public sector and overseas, are expressing interest and showing willingness to invest in an open source desktop.

The more prevalent trend in the United States is the move to portal-based environments, which has less to do with driving Microsoft from the desktop than it does with getting people on the same page and delivering only the information and applications they need, when they need them. The “enterprise desktop” idea is just a better, more reliable source of information that ties workers together rather than allowing them to take widely diverse paths.

Recommendations

The Microsoft Office System actually is better software, far ahead of any open source effort for at least a few years. But it’s designed with Microsoft’s interests in mind: to ensure your continued investment on Microsoft and Office, and to guarantee that the cost of your effort to change will outweigh the value of license-free software. Corporate control is not built into the products.

• Treat Office 2003 and SharePoint implementation like a strategic application rather than a desktop upgrade. Devise a long-term strategy for office collaboration, communication, and content management, and determine Microsoft’s part in it.
• For certain kinds of organizations, resistance is foolish. Office and SharePoint let you rely on employee entrepreneurship and innovation now.
• SharePoint Portal Server (SPS), as opposed to Windows SharePoint Services, seems a safe, effective investment, especially as it can be self-contained, requiring no more on the desktop than a browser. Still, companies implementing SharePoint should set firm policy for its administration and use.

AMR Research originally published this article on 30 March 2004.