Checking the Brakes on Office Accelerators

Today, Microsoft revealed Solution Accelerators for Office 2003. The nine kits, which will roll out periodically over many months, are targeted more at Microsoft’s reseller and system integrator channels than actual business customers.

That’s because, in some ways, Microsoft’s first customer is "the channel" and not the companies running the software. Microsoft has no hard-and-fast sales channel, relying instead on resellers, system integrators and software developers to promote, sell and service the company’s software. Microsoft dedicates plenty of resources to servicing the channel, which, as I understand, accounts for a ghastly amount of the company’s revenue.

Case in Point: Early next month, Microsoft will hold its annual partner event in New Orleans. This year’s attendees includes a "Who’s Who" list of Microsoft executives, including CEO Steve Ballmer and Information Worker (aka, the Office group) head honcho Jeff Raikes. Thanks to Mr. Ballmer, Microsoft employee compensation is now tied to customer satisfaction. Unhappy customers mean no raises this year, folks. For many Microsoft divisions, the customers that count are the resellers, system integrators and software developers. Hence, the big showing of top- and mid-level managers at this year’s partner event; it’s the place where the customers will be.

So, circling back, the Office Solution Accelerators are targeted at this important third-party sales channel. Microsoft partners can use the kits to create specific solutions, such as generating proposals, recruitment or financial reporting, around Office 2003. I’m assuming that the Office group is taking a cue from its Windows sibling. In December, Microsoft unveiled Solutions for Management, essentially guides--or blueprints--for better setting up and managing Windows systems.

Like the earlier tools, the Office Solution Accelerators will come with pre-defined templates, architectural blueprints and other nebulous-sounding extras that Microsoft partners would use to create nine solutions. My question for Microsoft: If Office is so easy to use, why do the "real" customers have to pay other customers (the channel) to really make the productivity suite practical for specialized, but everyday, business tasks?

The answer to this question is no small one, but it is something that every company using Microsoft software should ask. The software giant’s business model is intricately entwined with middlemen (ladies, you don’t want me saying middlewomen, here) whose business is to make money on complexity. Granted, Microsoft isn’t totally alone here. HP, IBM, Oracle, Sun and many other high-tech companies thrive on services. But, I believe that Microsoft’s dependence on its third-party sales channel is a disincentive to making enterprise software as simple as it should be.

This dependence also raises questions about how in touch Microsoft is with its real customers, other than the largest businesses that typically get more hands-on treatment from the software giant. This "disconnect" is one reason I believe Microsoft doesn’t completely think through the true cost and complexity impact on its real customers.

The Office Solution Accelerators are a great example of this. Near as I can tell--and Microsoft has been unable to clarify this point yet--the majority of the Accelerators would require Office Professional 2003; in most cases, because InfoPath, full Extensible Markup Language (XML) support or other features only are available with the high-end Office 2003 version.

I don’t have any hard numbers I would like to present today, but let’s assume the majority of businesses deploying Office use Standard. After all, not every employee needs to run the Professional suite. Until Office 2003, Standard or Professional largely was determined by what applications were in the box. With the new Office, Microsoft marks the difference with the applications bundle and select features that are not available with Standard.

That means, to implement some of these solutions, some businesses would have to step up Standard versions to Professional when moving to Office 2003. I don’t think Microsoft is necessarily trying to squeeze more money out of its real customers. More, I think there is disconnection between the software company and these customers.

By the way, this situation isn’t great for the partners, either. Some businesses deploying Office might bristle and what might appear to them as forced upgrades to use any or all of the nine business solutions.

Posted by Joe Wilcox at September 22, 2003 09:54 AM