Microsoft pushed out a tech preview of its Live Mesh service, but is still holding back on delivering a more complete set of Office applications delivered from the cloud.
At this point, Microsoft has delivered Dynamics CRM as an on-demand, multitenant hosted service as well as hosted versions of Exchange and SharePoint. Tim O'Brien, senior director of platform strategy for Microsoft, said this week, "We have a huge portfolio of applications that we'll over time take in this direction," meaning that Microsoft is rearchitecting much of its software for multitenancy to run in its growing number of data centers. Multitenancy allows software to be delivered from the cloud with great efficiency, running multiple customers off the same instance.
Ray Ozzie's memo detailing Microsoft's vision for a future, with the Web rather than the PC at the center, didn't shed any new light on Office for the cloud. Microsoft is focusing on its software+services model, creating services--such as Excel Data Services, SQL Server Data Services and BizTalk Services--that fuse the Web and client software.
In the memo, Ozzie stated:
Office Live will bring Office to the web, and the web to Office. We will deliver new and expanded productivity experiences that build upon the device mesh vision to extend productivity scenarios seamlessly across the PC, the web, and mobile devices. Individuals will seamlessly enjoy the benefits of each - the rich, dynamic editing of the PC, the mobility of the phone, and the work-anywhere ubiquity of the web. Office Live will also extend the PC-based Office into the social mesh, expanding the classic notion of "personal productivity" into the realm of the "inter-personal" through the linking, sharing and tagging of documents. Individuals will have a productivity centric web presence where they can work and productively interact with others. This broadly extended vision of Office is being realized today through Office Mobile and Office Live Workspace on the web, augmented by SharePoint, Exchange, and OCS for the connected enterprise.
Ozzie is telegraphing that Microsoft will continue to add services, such as integrating a social layer into Live Mesh, but for now Office Live consists of Office Live Workspace and Office Live Small Business. Office Live Workspace works with Word, Excel and PowerPoint, allowing users to open and save files and access them from any computer via the browser. It also synchronizes lists, such as contacts and tasks, with Outlook. The Small Business version is for setting up and managing e-commerce-oriented Web sites.
Microsoft also has Windows Live services, such as Hotmail, SkyDrive, Spaces and Writer, but nothing approaching the Office (or Microsoft Works) suite or Google Apps or Zoho.
In the past Microsoft executives have said customers aren't asking for a cloud-based Office suite. Recent shifts in the market, such as Salesforce.com integrating Google Apps may alter that view sooner than later.
For now, Microsoft appears to be sticking to its view that downloadable client software is a long way from extinction. I wouldn't argue that point, but that shouldn't prevent Microsoft from also providing a collaborative, cloud-based version of Office applications for those who prefer that mode of operation. It doesn't violate the software+services mantra. It just leans more into the cloud, which is what Microsoft is doing. Let users have it the way they want it. Of course, things like messing with the super-lucrative desktop Office business may not be in the best interest of Microsoft's shareholders in the short term, but that is a slippery slope given where software is heading.
MOUNTAIN VIEW, Calif.--Two titans in the enterprise software business faced off Thursday at a Churchill Club event at the Computer History Museum here, and a bit of history was made.
The sage, 64-year-old Hasso Plattner, co-founder and Chairman of SAP, and the upstart, 43-year-old Marc Benioff, co-founder and Chairman of salesforce.com, debated the future of enterprise software, fielding questions from Quentin Hardy of Forbes and the audience.
The history footnote of the evening came from Benioff, who challenged Plattner to build SAP applications on the Salesforce.com platform. "I want to figure out how to get SAP to build on our platform," Benioff said. "SAP needs to write its new apps on our platform, and I need to help him do that because there is no way he can figure that out...we will be in a war to get more developers on our platform."
Debate partners: Marc Benioff and Hasso Plattner
(Credit: Dan Farber)Plattner, who was writing software when Benioff was in grade school, wasn't biting, and became a bit exercised. He questioned whether Salesforce.com could keep thousands of on-demand service interfaces consistent as its platform grows and as customers write code to integrate with the platform.
"All 41,000 Salesforce customers are on the same version. When we release the new version in June, we don't break the links. In some cases they have to re-implement, but you still have a managed environment," Benioff countered.
"I would be scared at what you just said. If you extend that to whole enterprise system, I would be scared to death," Plattner responded.
Benioff, who I declare the debate winner by nontechnical knockout (no references to in-memory database systems), stuck to his vision of the future. "You have to buy into the fundamental premise that the world has to change, and because we have a global network and a new architecture with massively parallel servers, we can build technology with a level of automation previously unimaginable.
The evening started off more calmly, with Benioff describing the new generation of enterprise software companies, which he said will look more like consumer companies, such as Google, Yahoo, and eBay on the back end, but serve up traditional business functionality.
Plattner rambled on about betting on modification-free software with SAP R/3 in 1993, only to find that customers wanted to customize it. SAP's plan today is to provide 2,100 service interfaces in Business ByDesign, its forthcoming hosted suite of applications for the mid-market. Those interfaces will mesh with each other but will not be customizable. He differentiated Business ByDesign from Salesforce.com by virtue of the completeness of the SAP suite. SAP has been working on Business ByDesign for four years with 2,500 developers on the project, and it won't be generally available until later this year or 2009.
For SAP, software is about serving larger businesses with a complete, integrated suite of applications with "wall-to-wall functionality," Plattner said.
Benioff claimed that the Salesforce.com platform could run any kind of enterprise application. He asked Plattner why Salesforce.com beat out SAP for the Dupont business. "We had a shitty CRM system," Plattner said. He then said that the new SAP CRM 7.0 is the best product in the field. "You had a good time and now we are. If you are really successful how much are you worth?" Plattner said.
Benioff said Salesforce.com is aimed at all sizes of companies and across industries. "We have been passionate about moving obstacles out of the way of the old enterprise software companies," Benioff said. "We are at the verge of a breakthrough, and it is as big as the software-as-a-service business has been. We see platforms emerging where we can accept customers and ISV code and run it natively, just as R/3 ran natively on Oracle. This means you can run the business processes of any company in the world. We are moving now to platform-as-a-service, and it's biggest the threat to SAP, MS, Oracle, and BEA architectures."
As salesforce.com evolved from CRM to application platform, Benioff has been making that claim the client/server model is doomed. Plattner touted SAP's developer community. "We have 1.2 million software developers on our platform, 2,000 partners developing addition software," he said. "We have the largest software development project in our history, with 2,500 developers developing on demand," Plattner added.
"You have 2,500 developers and 2,100 interfaces. All that and no customer success," Benioff taunted.
In a moment of calm, Plattner said, "We have many things in common. Let me give you some advice, but you might not take it because you are younger: don't overestimate your platform." Sage advice.
Plattner was asked if he would consider buying Salesforce.com. "It always makes sense to look into something. If the Apex platform (the Salesforce.com platform) is really as good a he thinks it is, we should look even more," he said. Plattner also said that he thinks Oracle, where Benioff worked for 13 years, will end up acquiring Salesforce.comTo put this debate in historical context, Benioff has been known to disparage SAP, which generated $15 billion in revenue for 2007 with a 26 percent margin, as a company that doesn't innovate. In an interview with News.com's Charlie Cooper and myself a few weeks ago, Benioff said:
With SAP, you really have not seen innovation in the last 10 years. If you think about what is the one thing that SAP has ever innovated, what have they created that's unique to the industry or value-added technology? I have a hard time thinking about what SAP is going to be known for at the end of the day.
In August 2007, Plattner's proxy, SAP CEO Henning Kagermann, characterized Salesforce.com as follows:
Salesforce is like best of breed in the old days. It's always an advantage, but you cannot be best at everything worldwide. That's our advantage--we can run an entire business.
Speaking of old, SAP was founded in 1972 and Salesforce.com in 1999. Salesforce.com is approaching $1 billion in annual revenue, and a much smaller margin than SAP, with its software-as-a-service platform and subscription business model. SAP has been slow to adopt the software-as-a-service model, but is prepping to launch Business ByDesign. It will be more directly competitive with NetSuite than Salesforce.com, which is built primarily around CRM applications.
Benioff summarized the future of enterprise software during the debate in this statement: Software-as-a-service will not happen without Microsoft, Oracle, or SAP. But they are holding on to the past. The new Internet companies--Amazon, Google and ebay--what they have done and the new young internet companies is really the next generation."
Fundamentally, companies will find it more practical and cost effective to deploy enterprise software from the cloud over the next decade. As I said earlier, Benioff won the debate, but he has a long way to go to unseat Plattner's company.
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