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.
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.
The glue holding the pieces together is XML. "Everything we do shares in the fact that we will try to help people exploit the new lingua franca of the Internet," Ballmer says. (For the full Ballmer interview, go to informationweek.com/910/ballmer.htm.)
With PC sales forecast to grow just 1% this year, Microsoft needs new ways to get customers to upgrade. "Desktop application features don't drive upgrades," says Therese Fontaine, principal architect at Honeywell International Inc.'s $7.2 billion-a-year Automation & Control Solutions unit.
Group VP Jeff Raikes, who's in charge of Office, says today's software is "underserving the opportunity" to help companies make faster, more-informed group decisions. Microsoft's proposal: Deliver "business intelligence for the masses" through a new data-analysis client called Data Analyzer, replace paper documents with products such as XDocs, fuse Office and instant messaging with the planned Greenwich real-time collaboration server, and get workers using Tablet PCs.
JetBlue Airways Inc. plans to incorporate Office 11 into a project that would let pilots update flight manuals on their laptops from a company intranet and deliver specs on airplanes to independent contractors via an extranet. Also in the works: .Net applications that could deliver reports about demand for fuel and parts to JetBlue's suppliers. Chief developer Adam Cohen says coding these apps with Web services could free development staff from generating reports, which take half their time. But JetBlue's partners will need to run Office 11 to take advantage of the apps, he says.
There's a dollars-and-cents side to Microsoft's pitch. Customers can save $190 per PC by replacing Windows 95 or 98 with Windows XP, it says, and Microsoft has allotted $1 million to perform cost-of-ownership studies for companies with more than 5,000 PCs running old versions of Windows. But there's a flip side to the cost-saving argument: Some customers say the vendor's new Software Assurance licensing policy actually costs them more than before. Two months ago, Microsoft abolished discounted upgrade versions of Office and Windows and required large customers to pay for all upgrades released during a contract's life--or forgo any upgrade. "They held us up," says John Thomas, CIO of engineering and construction company Parsons Corp., which signed a license agreement this summer. Ballmer insists most big accounts see their costs drop.
Then there's the perception issue. Microsoft doesn't spring to mind as a primary source for business-process help. German technology company Siemens AG has upgraded half of its 350,000 PCs to Windows XP, and other Microsoft products--Office XP, Exchange, Windows 2000's Active Directory--are deeply rooted in its IT infrastructure. But technology development manager John Minnick says Siemens' main business processes, such as manufacturing and human resources, run on other platforms, and he sees no short-term need for help from Microsoft. Still, he says, "We're going to be open about it."--with John Foley, Tony Kontzer, and Paul McDougall