Cloudy skies for Microsoft Office

According to most analysts, it’s steady-as-she-goes for Microsoft Corp.’s Office productivity suite: the company’s installed base ensures dominance for years to come. But for many enterprises the features war is over. Who wants to learn a new way to do the same work? There is little reason to upgrade, and competing applications – and delivery models – are adapting faster where it counts. “Microsoft Office 2007 isn’t cheap, and the costs of upgrading are baked in with compatibility issues,” says Dana Gardner, an analyst at Interarbor Solutions in Gilford, NH. “You have to upgrade to be compatible across multiple formats, then you have to upgrade the operating system, which itself often requires an increase in memory and a hardware upgrade.” However, Gardner contends that in this economy there is opportunity for Office ‘07 among greenfields companies or departments to fulfil productivity and cost-saving mandates. Organizations want to avoid the snowball effect of upgrades and additional pressure on help desks and support. Any migration can be a hassle, including to a competing platform, which is why Microsoft’s massive installed base seems safe. “There is not a lot of momentum in the market as far as ripping and replacing office productivity applications,” says Gardner. “But smaller companies will start looking at software as a service and cloud computing – the cost of acquisition is lower, and there is no need for on-premise equipment.” Marc Perrella, vice president, technology, at research firm International Data Corporation (IDC) in Toronto, says that Microsoft’s market share is secure. However, the company is to some extent a victim of its own success, as many enterprises are content with earlier versions. “Office 2007 was a major enhancement on 2003, but enterprises have their own renewal cycles and the software has to run its course,” he says. “People also often have to migrate templates and macros.” Perrella adds that companies need to take into account the challenges associated with workflow for other applications such as CRM and ERP, and how end-users might be affected. That said, a suite like Office 2007 brings new capabilities, and there may be costs associated with not doing anything. But these can be hard to assess. Guy Creese, vice president and research director of collaboration and content strategies at the Burton Group, tells Telemanagement that the same is true with the many alternatives now on the market. The underlying structural issues make it unlikely people will change. “First, you have different levels of user experience, so you have some folks who are doing just fine with a more basic productivity suite, and others who will only let Excel get yanked from their hands in their dying breath,” Creese explains. “And second, the competing products still cannot completely translate between each other, and if you want to keep your life simple you want your people to collaborate on the same suite.” Creese says that big players like IBM, Sun Microsystems, and Google Inc. will proudly note that they do just fine without Microsoft Office. The truth is, however, that they can’t get all of their employees off it. “The CFO that has 15 years of using Excel macros is not about to give that up. And there is also the issue of workers who deal with outside people – those employees in PR, analyst relations, and legal – they assume that Office is what people are using.” For its part, Info-Tech Research Group of London, ON, advises its clients to enforce the default file format mode to reduce compatibility issues when upgrading to Office 2007. “We have seen a lot of compatibility problems,” says Tim Hickernell, lead analyst at Info-Tech. “This is especially true with ‘round-tripping’ – converting, editing, and converting back. This is where we have seen many errors; particularly with Excel, where there can be a lot of corruption.” But once people choose Office 2007, they often like it, adds Hickernell, and the number of people leaving 07 has been greatly over-stated. “Very few and far between are leaving Office 2007,” he says. “There is a lot more bravado and discussion than people who are actually doing it. Something like the ribbon feature is a benefit for some, and for others only a temporary barrier.” The Google safety net The technological environment is shifting quickly, and there is not necessarily a straight line from desktop, to client server, to software as a service, to cloud computing. In fact, there is a very real possibility that in a few years we will see large scale migration to the cloud. “If you are a highly mobile, smaller firm then you might want to start out with Google Apps and start thinking in terms of productivity as a service,” says Hickernell. “However, in general the concept of desktop productivity applications as a service will not mature as an alternative to desktop applications; instead, it will be a hybrid model, a combination.” Hickernell argues that common Microsoft Office features like basic word processing, graphics, and tables – those functions that are process specific – could be disaggregated and delivered as software a service (SaaS) or in the cloud. And though many people treat ‘SaaS’ and ‘cloud’ as interchangeable terms, there are important differences. Cloud infrastructure does not limit inter-application data movement, and the servers function like those in your own data centre, allowing for data repositories. This provides real advantages for records management, a crucial factor in today’s regulated environment. “People are quite comfortable with the general security of SaaS, but records management is another issue” says Creese. “If I get subpoenaed and have to freeze all documents for a given project, how do I do that with SaaS? This is something that big enterprises worry about.” The hybrid model has its appeal as a way to ensure a degree of low-cost business continuity, because it offers a cheap and easy way to offer back-up storage. But it could be argued that this is only part of the solution, because going hybrid might mean a real headache in terms of compatibility issues. “Google Apps are good for backup,” says Gardner. “It’s like a safety net or insurance. But isn’t it a little ridiculous that in 2009 we are dealing with word processing format issues? That’s even more ridiculous than needing two GHz of RAM to run Vista. There should be a new standard around Web formats – increasingly people are doing business online, and that’s where the productivity is. As it is, I get better performance off the Web than with client-server software.” From Gardner’s perspective, no amount of marketing or hype is going to keep people on Microsoft Office, because the trend to cloud computing is too strong. “Google is not even hyping or evangelizing its technologies,” adds Gardner. “They are confident that if they sit back and wait, doing things for and by the Web makes a lot of sense.” As a result, Google can afford to let the technology tell its own story – it doesn’t push the ROI of Google Apps, but instead moves relentlessly forward with its vision of cloud-based computing. As it makes its presence felt in other areas such as mobility with Google Android, there is the possibility that the company’s technology will converge to such a degree that the business case will become obvious. But we aren’t there yet. “Trying Google Apps in a greenfield environment without a library of legacy content is a real opportunity,” says Hickernell. “But you need to gauge your customers and partners – it could still get you into trouble with the formats. You have to get down and think about all the issues. Is it worth saving a few hundred dollars to introduce a new application?” Start with the desktop The technology is here to deliver the desktop experience as a service, and adoption is accelerating due to strong economic drivers. Managers want to see their workers on the right device for the right purpose, and to have a fully-loaded desktop PC for every employee is a heavy – and unnecessary – burden on an enterprise in terms maintenance, support, security, and upgrades. “Most enterprises aren’t aware of what applications are available in a SaaS format,” says IDC’s Perrella. “And when considering Office Live , we see that there is still a preference for premise-based software.” As it stands, many fixed corporate environments hold application and user data away from the actual desktop. The data is stored somewhere on the network, and all the back-end systems run in a data centre. Moving from there to the cloud might not be so hard, especially with big companies like IBM, Sun Microsystems, and Google championing the transformation. “In this economy, with software delivered as a service CFOs will says ‘this is good enough’,” says Creese. “The financial benefits are too great – instead of paying for a bunch of licences up front you can pay as you go and treat it as an operating expense. It doesn’t burn a hole in your balance sheet; IT managers will swallow hard and say ‘yes, sir’.” Creese recommends that for those enterprises thinking of breaking the Microsoft habit, the thing to do is to start with some low-scale tests. “Invest some time and a little money,” he says. “Look for departments that you can give different office suites too and see how it works. You don’t need to put much money or training into this to see if it is something you want to expand on.” Given that the majority of PC users – industry estimates put it anywhere from 70% to 80% – are doing only simple tasks, running those desktops remotely doesn’t have to be daunting. With cloud-based computing you don’t need blade servers in cages in a data centre, and you don’t need to worry about networks. Does Microsoft Office have a long term survival strategy? After making Open XML an ISO standard, Microsoft has switched gears so that it is no longer supporting its own Open XML, but is instead supporting OpenDocument format (ODF) and Adobe’s portable document format (PDF). Why? Because that’s what its customers wanted, and because Google Apps and OpenOffice, which are both free, also natively support PDF and ODF. According to IDC Canada, most enterprises still have a preference for the premise-based version of Office 2007, as opposed to Microsoft Office Live. And though price-cutting may be in the offing, Microsoft has such a broad product line it can bundle and discount to a significant degree to maintain market share. “Microsoft still has the lion’s share, over 90% of the market,” says IDC’s Perrella (in fact, Microsoft itself says that 77% of Mac users use Office). Perrella adds that there are those organizations that will experiment with IBM Lotus Symphony, Adobe Buzzword, OpenOffice, and Google Apps, but there is still a strong propensity to migrate from older versions to Office 2007. “People are still concerned about data loss, security concerns, where this stuff is residing,” he says. But he also feels that present economic conditions could provide a push for alternatives to on-premise versions of Microsoft Office. “In this slowdown capital is harder to come by. With higher barriers to capital outlays SaaS may be more attractive. But then organizations have to mitigate risk by making sure that the software integrates with existing IT systems and environments.” One real threat to Microsoft – and something that Google Apps and OpenOffice don’t have to worry about – is software piracy. A new strategy named Office Genuine Advantage, which can be downloaded with Window's automatic update, uses a dialogue box to inform users whether or not their Office software is officially licensed. This is a much more friendly approach than the controversial Windows Genuine Advantage, which turns a computer's screen black if it uses pirated Windows software.

Cloudy skies for Microsoft Office

News | 02/23/2009 8:48 pm EST

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