July 17, 2003 4:00 AM PDT

Microsoft buddies up with new Office

Read more about Office
"Open to new ideas. Plays well with others."

Microsoft is getting this unexpectedly good feedback from other software companies as it readies the next version of its Office desktop application package.

The most notable new features in Office 2003 include the ability to save documents in XML (Extensible Markup Language) format in addition to in Office's native file format. This should allow data to be read by other software, such as corporate databases and customer relationship management (CRM) tools.

The Redmond, Wash.-based company is counting on those XML advantages to convince businesses that it's worth the investment to upgrade this time, given that many of them passed on the last few less-than-revolutionary Office upgrades.

Despite Microsoft's growing interest in markets for back-end software such as CRM, many of the programs the new Office will need to share data with will come from companies other than Microsoft.

That puts the software giant--known for its hardball business tactics--in the position of seeing its success depend on how well it works with current and potential competitors.

"There's been a real shift in their public strategy, especially their rhetoric," said Laura DiDio, an analyst with research firm the Yankee Group. "Microsoft would be right in the fray, before, as far as mixing it up with vendors. We're seeing a much kinder, gentler Microsoft now, absent the aggression."

And the honey is attracting bees, as the company prepares to launch the Office System in a few months. (Office System represents the brand covering the whole family of products, which includes Office 2003, Publisher and Visio, among other desktop software.)

Microsoft last month launched several initiatives aimed at attracting partners to work with Office 2003, and signed up such high-profile companies as Hewlett-Packard, Electronic Data Systems and Xerox.

In addition, the new Office Marketplace and Microsoft Office Solutions Directory Web sites give the company's allies a forum to promote their Office-linked services to customers.

The motivations for Microsoft and its partners are a mix of necessity and mutual benefit. On the back-end software side, businesses have become increasingly strident about demanding that new software works with what they already have. The old "rip and replace" strategy of pushing customers into buying whole new systems when they only need one application is kaput.

"A lot of these companies have stuff written in Cobol running on a mainframe that, after 20 years of tweaking, is pretty much perfect," said Paul DeGroot, an analyst with research firm Directions on Microsoft. "Why would you want to pull something out like that? There's just a lot of resistance to rip-and-replace.

"Microsoft recognized that they had to cooperate, that to a large extent their success would depend on helping customers who want to add something to an existing system," DeGroot said. "Their success depends less on leading everyone down a Microsoft path and more on really being the leader in exploring new technologies."

Plugging in XML
The best way to ensure interoperability is to adhere to widely published standards, most notably XML, which has been embraced by Microsoft and most other big software makers as the basic scheme for describing corporate data.


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The software giant played a major role in working with the World Wide Web Consortium (W3C) to set the XML standard, and has been active in guiding related efforts.

"Microsoft has been very visible and active on the standards groups," DiDio said. "They are very much aware that integration and interoperability are critical. No vendor can afford to engage in those proprietary wars we saw 12 or even eight years ago."

"We've been involved in the development of XML because that's in the best interest of the whole industry," said Dan Leach, Microsoft's lead product manager for Office System. "I would hope that our leadership in the industry is viewed as a positive thing...and maybe some of the preconceived notions people might have about Microsoft are really challenged, when they see that we take very seriously our leadership position."

But industry-standard XML is just the foundation upon which modern software is built. Adherence to basic XML ensures that disparate computing systems can recognize data, but Microsoft and other software makers commonly add proprietary extensions that control how data is presented.

A case in point: Microsoft's efforts on Office interoperability stand in sharp contrast to its work in the Web services area. While the company is rapidly forming an alliance to promote Office, it's become embroiled in political battles with Sun Microsystems and Oracle over its bid to establish Web services standards that best complement its product strategy.

"What each of these vendors will do, Microsoft included," DiDio said, "is that they will adhere to the basic foundation for the standard, and they will make just enough tweaks where you can't say its proprietary, but it's definitely their own thing."

Some have questioned how closely Office 2003 will adhere to standard XML. Microsoft will stick to the W3C standard just enough to ensure a basic level of interoperability, DeGroot said.

"Part of it is an old problem of where a standard ends, and the vendor puts something in to extend it," DeGroot said. "I think (Microsoft) can make the claim that if someone ships you a file, your system can read it. Does it mean you can open it and change product numbers and update it? Not necessarily.

"The kind of dirty little secret around all of this XML talk is that there's often a huge amount of programming and parsing to make this fit into your business process," DeGroot said.

A friend in need
That's why back-end software makers want to buddy up to Microsoft. Partnering with the software giant means they get to tap into those proprietary add-ons, which means they can offer Office applications as a way to view and manipulate back-end data. Given that no enterprise software maker can offer a user interface as familiar as Microsoft Word, that's a compelling advantage.

"It's a very usable user interface, and people spend a lot of time there," said Susan Funke, an analyst for research firm IDC. "I think that's a big part of why--if you look at somebody like a J.D. Edwards--(enterprise software companies are) definitely looking at Office 2003 in their strategy."

By giving workers a familiar interface, Office 2003 can help remove a roadblock that has helped prevent wider adoption of CRM software and other enterprise technology, Microsoft's Leach said. "One of the biggest challenges with these back-end systems is the tremendous ramp-up people have to go through, to get proficient at using it," he said.

Microsoft's integration of XML offers even more benefits for companies involved in the nascent Web services field, as it allows them to insert those services into Office applications. Microsoft gets to promote new whiz-bang services that make Office more useful, and service providers can offer their wares in the environment where office workers spend most of their day.

"I think it's a big step forward for Web services to have it folded within the application people are already using," said Greg Gerdy, vice president of channel marketing at Factiva, an offshoot of media companies Dow Jones and Reuters.

Factiva signed a partnership agreement with Microsoft last year to enable its research and information services to be folded into Office 2003 applications. Customers could click on a company name in a Word document, for instance, and quickly get basic corporate data from Factiva sources.

"It slows people down if they have to open a browser and start a search engine or launch some new application to get a piece of information," Leach said. "If I can do that from within Word, I'm much more likely to build that into my day-to-day routine. That's a tremendous business advantage for companies offering these kinds of services."

Microsoft, meanwhile, gets to extend Office in a way the company couldn't do on its own. "The benefits definitely flow in both directions," Gerdy said.

 

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