Microsoft targets service organisation at enterprise

Microsoft announced last week that it would combine its product support and consulting divisions into a single services organisation, taking on increased responsibility for managing corporate IT implementations for users.

Analysts characterised the move as a significant step in Microsoft's effort to win over more large enterprise customers to its server-level operating systems and supporting products such as the SQL Server database.

"This is a major change in Microsoft," said Rob Enderle, an analyst at Giga Information Group. "It moves Microsoft one step closer to being more like an IBM -- having this tremendous breadth [of products and services]. Microsoft now has a comparable ‘buck stops here' proposition."

Mike Silver, an analyst at Gartner Group, said the combined services organisation will operate as a profit center rather than a break-even cost center, which is how support has operated in the past. That could mean increased prices for some services, Silver said. But Microsoft will also be offering to do more for customers, he added.

The trade-off is "not necessarily a bad thing" for users who want Microsoft to be more involved in their enterprise IT projects, Silver said.

The software vendor said it hopes to make its services operations more attractive to large customers by offering to act as a prime contractor on technology projects. For example, Microsoft said it recently took the lead role on a team of 16 vendors that installed systems based on its software and XML technology for the British government.

Enderle said that given the push Microsoft is putting behind its Web-service-oriented .Net technology plan, the company "didn't have any choice" about entering the services business in a more complete way. "If they're serious about .Net, they had to do that," Enderle said, adding that Microsoft needs to have a stake in doing .Net-related implementations to give users confidence that the required back-end development work is worth the investment.

Bob Dutile, a senior vice president in Key Corp.'s enterprise architecture group in Cleveland, said his company has turned to Microsoft in the past for assistance with Microsoft Transaction Server and the vendor's Component Object Model and DNA architecture. He added that his company is "paying a lot of attention" to Microsoft's .Net framework.

"Services are a very important component in the offerings of technology vendors. That's what we look for from vendors. We like them to have both products and services," he said.

The Boeing Co., which is on the threshold of a 100,000-PC desktop upgrade, recently formed a task force to evaluate Microsoft's .Net platform. Although it's too soon to judge Microsoft's role in professional services, Carl Jones, director of desktop, messaging and Web technology at the Seattle-based aerospace company, said that any consulting partnerships would be based on business-case needs.

"Most important to us is for a seamless user experience to the new systems," he said, noting that any partner would have to be able to work with Microsoft and non-Microsoft applications.

Seattle-based Avanade Inc. is a joint venture between Microsoft and Chicago-based Accenture to deliver IT services to corporate users. Adam Watby, an Avanade vice president and a 10-year Microsoft veteran, said he didn't think there would be competition between Avanade and the new Microsoft services group. "Our business is technology integration, and we'll work with multiple technologies," he said.

Mark Hall contributed to this report.