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Social Enterprise – Quo Vadis Microsoft

October 26, 2011

It is crunch time for Microsoft and the clock is ticking.

The real battle for the future of Microsoft is taking place in the enterprise space. It is all about Microsoft’s future role as the player in the collaboration space as well as bringing the business software to use in a new century kind of way. Let us not dwell on the competitors. I have covered Google and Salesforce.com before.

Let’s first look at the two major components needed:

  • Internal collaboration
  • Collaboration with customers and consumers in social networks

So far Microsoft’s position in the market for collaboration enterprise tools is quite strong. Exchange is the major corporate e-mail system, SharePoint is growing at fantastic rates and even Lync is gaining foothold. With Office 365 Microsoft has even introduced a “Software as a Service” (SaaS) offering where Microsoft runs the programs mentioned above for their customers in the cloud. As a matter of fact though these cloud versions do have a limited feature set. This is especially true for SharePoint.

Next to this Microsoft does have CRM software, which again is available as an on premise version as well as an online version, SaaS, from the cloud.

So it looks like from a component perspective as well as the market position Microsoft seems to be in a great spot. That is only half the truth. Microsoft is facing some real issues when it comes to making the step towards a fully integrated collaboration stack:

  • Lack of social collaboration component
  • Separation of products / lack of integration
  • Cloud not being the primary focus

You might remember the old day when the interface for Word looked completely different from Excel and you wondered how that could have happened? The easy answer is that two separate groups with minimal alignment created their products like standalone versions. To a high degree that is what is happening within Microsoft still today. Not only is the obvious demarcation line between CRM, as an acquired product line, and the classic Office programs doing harm. There is more to it. There is an undecided dispute about the direction of cloud delivery and many still believe that cloud delivery must be forced to be less feature rich artificially. This is not only to harvest the classic software business margins but also to protect existing empires within the organization.  CRM Online only with the latest version was shifted onto the same platform as the Microsoft Online services. Up until then it was delivered on the Windows Live consumer foundation. The integration mainly happens at the front end; a real integration as one collaboration system has not taken place yet.

And there is a missing link as well. Rather than being a step ahead on collaborative needs of enterprise customers Microsoft has been overtaken by the likes of Yammer and Salesforce.com. While e-mail will not go away its importance is diminishing. New ways of communication and collaboration are taking over and Microsoft is struggling to embed these into their products. Admittedly SharePoint does have bits and pieces like WIKIs but not in an easily integrated fashion and again there are limitations to the cloud version.

Let’s look at the second part of the recipe now – Collaboration with customers and consumers in social networks. This is even more difficult for Microsoft as they do not have any legacy in this business they would be able to build upon. Microsoft tried to drive identity with the Live ID but other than Google, who only lately took the identity business serious, they have not build a social network around it. Salesforce.com is lacking the social network as well but they cleverly integrated Facebook into their world.

So on the “connect to consumer” sides of things the Microsoft options are somewhat limited but there is one asset Microsoft has. Social connection does not only take place B2C but also B2B. With the still existing spread of their products in the enterprise space they would be able to build the connections between enterprises. Time is running though as Salesforce.com is not only pulling customers over to their side but also building integrations into SharePoint for those wanting to stick to the “old world”.

Quo Vadis Microsoft?

If you ask me there is no question that Microsoft needs to get its act together quite quickly. It is without alternative that they become a player on both sides of the social enterprise urgently. But how can they do that? As always in life there are no easy answers but I have tried to put together some actions.

Internal collaboration – Acquire Yammer.com and focus on O365

The cloud delivery is the future for these standardized components. So a focus on O365 and feature parity should be a mantra within Microsoft. To speed things up it would make sense for Microsoft to buy Yammer.com. Only with their stack of services, their mindset and their customer set Microsoft can really get into the race. Salesforce.com has a clear lead and Google, once they understand the potential of Google+ for the Enterprise, will be following suit.

Yammer also makes sense from a delivery perspective. Due to their strong cloud focus they force Microsoft to put the cloud integration first. Any on premise spin off of the Yammer software has to wait. And actually this order of priorities makes a lot of sense.

Internal collaboration – Fully integrate CRM

The separation of CRM from the other products is causing issues. Salesforce.com has proven that actually CRM as the major deposit of information is the backbone of the collaboration infrastructure. Microsoft should reconsider the suite of services. This goes into the direction of the actual software itself but also its sales. Even today the CRM sales people are more or less separated within the Microsoft field. The future is an integrated collaboration story including CRM and this only works with integrated solutions and services but also a consistent integrated value story told by one force.

External collaboration – Integrate with Google+ and Facebook

Let’s face it, with Microsoft’s image and two major social networks already existing the probability of creating another successful social network under the Microsoft label are more than limited. Accepting this as a fact leaves not much alternative. Microsoft would need to make sure to make the best out of the open APIs to integrate into these social networks.

Will Google try to protect their world? I guess so but giving the current climate with regards to market control I do believe Microsoft has a lever to keep the doors open.

Bottom line

So what is blocking Microsoft to go down this path?

  • Lack of cash to buy Yammer?

No certainly not, Microsoft would be able to make this strategic acquisition

  • Organizational agility to make changes needed?

Yes, for sure. This is the major blocker. To drive the integrated vision of collaboration, Microsoft has to break up its organizational kingdoms. Microsoft has to make the shift to the cloud for real.

  • Vision not formulated

That is another issue strongly impacting the ability to make organizational changes. Lacking a broader vision people can buy in, thrive to achieve and are willing to take risks for, they will stick to their comfort zones and protect their silos.

It is crunch time for Microsoft and the clock is ticking. I just hope that the Microsoft management is not too distracted by phones, tablets, etc.

 

 

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