It’s no secret Microsoft has been trying to take over the workplace for a while now — just ask WordPerfect.
But with the advent of Office 365, it appears to be taking this to a whole new level. The potential number of capabilities and technology domains Microsoft has the ability to own (or at least try to) with the Office 365 stack is huge, and the moves it's making suggest it's gunning for at least some of them right now (collaboration, EFSS, e-discovery).
Uncertainty Complicates Purchasing Decisions
This dynamic hasn’t gone unnoticed among my clients, many of whom are concerned about what effect, either positive or negative, Microsoft’s ambitions will have on their application portfolios over the next three to five years.
For example, while Office 365’s e-discovery capabilities may be rudimentary today, in three years, Microsoft could get them to acceptable levels “for free” (i.e., included in the cost of the enterprise license agreements). If it does, clients need to think about their plans for investing in e-discovery very differently than if Microsoft doesn’t — and that uncertainty makes portfolio decisions very difficult today.
With that in mind, I informally polled some thought leaders and vendors in the marketplace to find out:
- Where they thought Microsoft was going with Office 365 (i.e., is it trying to take over the world?),
- Whether they thought Microsoft would be successful,
- What capabilities or domains they thought were most/least vulnerable to Microsoft’s lunch-eating aspirations.
The responses are too long to reproduce here verbatim, so below are some of the key themes and perspectives that emerged.
Different Takes on Microsoft Domination
Nearly everyone I polled said they believed Microsoft is trying to take over the world, but they differed slightly in with what they considered that “world” to be.
Chris Perram, CEO of FileFacets, saw the “world” Microsoft was gunning for as narrow, both in terms of capabilities and market segment:
“My feeling is that its strategy is actually rooted in Azure and Office 365 is a natural delivery mechanism for getting people into that infrastructure. Having said that, Office 365 will take over the world for document management, collaboration and file storage.
"The reason is not due to their advanced functionality but because they are targeting the small and medium sized businesses. It is a fraction of the price for a small architect’s office or ophthalmologist to implement Office 365 compared to buying a perpetual license of Office for everyone, installing on-premises infrastructure and then managing it. Winning the SMB market is winning the war.”
Laurence Hart, director at Dominion Consulting, saw Microsoft’s strategy as broad, “Microsoft is working to slowly own your digital workplace by slowly introducing everything you need,” but saw it as being pragmatic in its conquest:
“When it comes to partner solutions, Microsoft will let them continue to exist as long as the market that is being addressed by the solution doesn't grow too large. Microsoft is going to focus on the software competitors and making sure that it keep its customer base. Strong partner solutions are one way to achieve that. I think it is going to be successful by its internal metrics.”
However, he didn’t think Microsoft would succeed in providing everything you need: “It won't take over the world but it will always be there, lurking, in the industry landscape for years to come.”
Two Takes on Microsoft's Future
Tom Rieger, who’s been involved in product marketing and development in the Enterprise Content Management (ECM) space since 1991 at places like IBM FileNet, Documentum, OpenText, Informix and NextPage, saw Microsoft’s strategy as much more straightforward than either Perram or Hart: “Microsoft is moving clients to its cloud to better manage and create an annuity revenue with Office 365.”
In terms of whether it was gunning to take over certain capabilities or domains, he was less certain that this was its goal at all, or whether it could even be successful with such an attempt:
“[Office 365] is being extended with acquired pieces like Yammer and Skype for communications and collaboration. But it is no more 'ECM', content services or a compliant datastore than SharePoint. I don't see the ability to do non-MSFT capture, collaboration, visualization or the typical Governance, Risk, and Compliance (GRC) centric requirements [as] possible.”
Finally, Brian Tuemmler, Information Governance product manager at Nuix, was the only respondent who saw the ability of Microsoft to take over the world as dependent on clients’ ability to be successful with Office 365 rather than purely a function of how “good” Office 365 functionality was, “I think Office 365 will likely provide for the ability to take over the world, if you are very dedicated to get it done within your organization.”
However, he felt that Microsoft’s success would be limited by two factors: first, “[t]here will aways be bits and pieces that are left over for others in the industry to solve,” and second, “[s]ome orgs are still very hesitant to put any content in the cloud.”
Identifying Vulnerable Domains
In terms of which technologies, capabilities or domains were most vulnerable, the responses were varied.
Neal Keene, EVP Strategy, Intellidox, felt that Microsoft could make potentially any capability or domain a capability, but that many of them would be “significant [enough] to warrant large investments by Microsoft in the near term.”
Instead, he expected that Microsoft would, “continue to concentrate on driving Azure consumption and cloud deployments and look to improve integration across its platforms for Artificial Intelligence/Internet of Things/Data Analytics to drive future business.”
Perram thought that, “Office 365 is definitely taking over the collaboration space.”
“It just has too much functionality and market penetration for anyone else to compete in it. It needs to do a few things to make its platform flawless and then it is a true juggernaut.”
Hart’s opinion is that, “basic document management and enterprise file sync and share (EFSS) are two areas where Office 365 should be able to hold its own as part of the bigger picture,” but that, “[w]hen things move towards compliance, Microsoft is going to be less successful.”
“Compliance is a big picture view and for most companies, not everything is going to be in Office 365. All the emails perhaps, but there are going to be systems everywhere throughout a large organization. Managing the compliance across those platforms, and enforcing the policies across those systems, is going to take more work than it will likely get in return.”
Sometimes 'Free' Is a Hard Sell
Firas Raouf, CEO at Everteam went even farther than Hart, saying that, “[t]he remaining monolithic platforms for content management, Documentum [editor: now part of OpenText], OpenText, FileNet … will become irrelevant.”
However, he doesn’t mean that Microsoft will own ECM — quite the opposite. For Raouf, “[w]hen people still want a broad document capability, they will turn to Office 365,” but Everteam’s take is that, “what people need are applications and solutions to solve business problems, not a platform on which they can build customer applications.”
Jeetu Patel, SVP Platform and Chief Strategy Officer at Box said, “we see [t]he very basic use cases for EFSS (pure sync for an individual user’s files across devices) ... as fairly elementary and rather low value.” However, Patel sees the opportunity presented by the move to the cloud (both for clients and software providers) on a grander scale than simply EFSS functionality:
“[T]he broader move to cloud content management … is a much bigger market and much bigger opportunity [and] goes well beyond EFSS. What the market has traditionally called EFSS is really a feature. Whereas the move of all content and files to the cloud — including legacy on-prem ECM workloads, the network file share market and the more interesting content services market for both internal and external applications that companies create to reimagine business processes or interact with customers differently — that is where we see us focusing and creating compounding value for users, developers, IT managers and organizations alike.”
Finally, Rieger put it succinctly as, “[m]ore pricing pressure as competing with the perception of 'free' is hard” — no matter the domain or capability provided.
Where Lies the Truth?
So much for what my esteemed respondents thought, what do I think?
Overall, while I agreed with much of what they each said (and learned from it) in my opinion, they were all a bit too pessimistic about Microsoft’s chances at taking over with Office 365.
Some of this might be because almost all of them are involved in software companies that play in the same (or related) spaces to Microsoft. And so they’re very invested in the ability of their products to provide the full range of functionality in their domain, something Microsoft could never compete with.
But, as we’ve seen in other domains, Microsoft only needs to get to “pretty good” before “free” (or at least included with our Microsoft ELA) starts to look really attractive, making the business case of paying another solution to deliver more look less attractive.
And perhaps there’s a bit of rose colored glasses coming into play. Almost all of them saw other domains as vulnerable to take over by Microsoft, but not their own, which does make you think.
Thank you to all of the participants. Their taking the time to share their thoughts allowed this to be more than my ravings on Office 365.
But what about all of you out there: how would you have responded to my questions? Would love to hear how you see Microsoft's attempt to take over the world, its chances of success and the domains most vulnerable. Jump in and keep the conversation going!