Microsoft's web-services strategy, until now focused on the tactical issue of IT plumbing, is shifting to the more strategic, and tougher, set of problems involving business processes. Products in development, described for the first time last week, aim not only to connect employees and companywide operations but also to improve collaboration and maybe even reinvent processes. It's a big step for a company with a 25-year reputation as a platform provider.

The new spin became clearer last week, as Microsoft executives appeared at events on both coasts to describe how new XML-based products will address collaboration, business-process management, and real-time visibility of data. Microsoft plans to deliver a desktop application, code-named XDocs, that will let users create business forms that store data formatted in XML for easy sharing across systems. A new server, code-named Jupiter, will fuse the vendor's BizTalk, Content Management, and Commerce servers into a package that can route documents in a workflow, in part through its support of the Business Process Execution Language for Web Services. Microsoft also detailed the next version of its E-mail software, Exchange Server.

More's coming. Next week, Microsoft will release the first test version of Office 11, the next edition of its productivity suite, which will include versions of Word and Excel that can read customer-defined XML "schema," so those applications can connect with business systems and read their data structures on the fly. On Nov. 7, Microsoft plans to launch its Tablet PC version of Windows XP, which will let users share handwritten notes and document markups over wireless networks.

The growing emphasis on collaborative business--Microsoft calls it connected business--is "on the right track," says Tony Scott, General Motors Corp.'s chief technology officer for information systems and services. While it's hard to quantify the value in such technology, Scott says, "we know it would increase our productivity significantly."

In Microsoft's future architecture, companies will use Web services to simplify workflows, let employees sift through business data using familiar desktop apps, and establish business-to-business hookups. Solutia Inc., a $2.8 billion-a-year manufacturer of carpet fiber and specialty chemicals, is testing XDocs as a way of extending the benefits of XML to small suppliers that aren't investing in it themselves. "Not everyone we deal with is a huge company," says Art Huggard, director of digital strategy.

	Microsoft will "increasingly play" in managing business processes, CEO Ballmer says, using XML and Web services.

With XDocs, Solutia can create order forms that store each field's entries in XML format. "You have an interface that looks a lot like what they're used to," Huggard says. Suppliers complete the forms and send them back via E-mail, where a BizTalk server grabs the data and sends it to SAP.

CEO Steve Ballmer says managing business processes is already "in the blood" at Microsoft--its development tools, after all, are used to write business applications--and it's an area in which the company will "increasingly play" as products such as Jupiter and XDocs are delivered. Microsoft's growing business-applications portfolio, which includes its Great Plains and Navision acquisitions, also will merge into a single, XML-rich code base, he says. If this all sounds familiar, it's because chief software architect Bill Gates sketched out--literally, with a pen and borrowed scrap of paper--a blueprint for the architecture in May (see "To The Middle," May 20, p. 22). Gates recently said he spends about half his time on a set of development projects, code-named Longhorn, that within several years could yield versions of Windows, Office, SQL Server, and Exchange that share a common data store.