Microsoft executive touts new Office suite at SaaScon

Article by Robert Mullins

Okay, so maybe Microsoft won't have lines of people outside stores waiting to buy Office 2010 like Apple fanatics waited for the iPad last weekend, but I'm sure more than a few IT administrators have May 12 circled on their calendars when Microsoft's flagship software suite for work goes on sale. The consumer versions go on sale in June.

Office 2010, the successor to Office 2007, came up Tuesday at the SaaScon 2010 conference in Santa Clara, Calif., where Tim O'Brien, Microsoft's senior director of platform strategy, explained the improvements in the Office suite, but also explained how Office 2010 is enabled for the new environment in which software is delivered as a service rather than as an application that is installed on the customer's servers in exchange for payment of a license fee.

In his presentation, as well as in an interview afterward with this reporter, O'Brien explained how he anticipates users in a typical company will likely access Office 2010 on a PC, through the Web, or on a mobile device and, even more likely, via all three.

Adoption of Office 2010 should follow the pattern set when the Microsoft Exchange server was introduced in 2000 with a feature called Outlook Web Access that enabled end users to access their Exchange server through a Web browser. Five years later, as interest grew in Ajax development, the language for writing apps in browsers, O'Brien inquired as to how Microsoft customers were accessing Exchange.

The answer was that two-thirds of users were accessing the server from both on-premise and via the Web, as well as a few who connected from mobile devices.

"It was kind of an aha moment for us that people don't use one or the other, they use all three depending on the context that they're in," O'Brien told his SaaScon audience.

Office 2010 is built to serve those three use models, too, as well as provide tighter integration with collaboration tool SharePoint 2010, also coming out May 12.

"To talk about Office 2010 without talking about SharePoint 2010 you only get half the picture," he said in the interview. The newest SharePoint features Business Connectivity Services software to better connect SharePoint with back-end systems such as enterprise resource planning (ERP), customer relationship management (CRM) and business intelligence (BI).

"The business connectivity services in ShardPoint are actually the enabler of what you do on the desktop and extract value out of the back end systems," he said.

And by offering Office 2010 in a SaaS or cloud computing environment, Microsoft is recognizing the realities of the IT industry today, even if it means forsaking the licensed on-premise software revenue model that made the company what it is today.

"People want simplicity. [They] want to get out from under the infrastructure management, the overhead burden. We're familiar with all the drivers there. So the opportunity for technology providers to take that pain off their hands is a revenue opportunity," O'Brien said.

Admittedly, he said, software companies make greater profit margins on software licenses than services, but the software license only counts for about 10 to 12 percent of the total IT budgets for most customers. By instead offering software as a service, Microsoft is now competing for maybe 40 percent to as much as 60 percent of the IT budget, even if it is at lower margins.

O'Brien quoted his boss, CEO Steve Ballmer, who has said repeatedly that "margin percentages do not pay the bills; margin dollars pay the bills." "The cloud gives us the ability to go after more margin dollars in a way that lowers the customers overall costs," O'Brien said.

What do you think? Are you going to run out and buy Office 2010 either for your on-premise IT system or through a SaaS or cloud provider? Let us know.

Original Article: http://www.networkworld.com/community//node/59804#comment-241320