Microsoft not undercutting its partners, CIO says

Yes, a "limited number" of Microsoft customers are outsourcing some of their IT operations to Microsoft, CIO Ron Markezich says. No, Redmond is not out to challenge IBM Global Services.

Since the recent revelation that Microsoft is managing about 6,000 desktops for Energizer Holdings Inc., Microsoft has worked behind the scenes to assure its many partners that it does not intend to create a line of business around IT services.

[IT services is] not something we would go and create a business around.


Ron Markezich, CIO, Microsoft

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Microsoft chief information officer Ron Markezich, in a recent interview, continued to emphasize the company's point that the contract with St. Louis-based Energizer to run its desktop infrastructure is a "project," not an attempt to take business away from high-profile partners such as Accenture LLP, Electronic Data Systems Corp., Capgemini and Hewlett-Packard Co.

"I've met with quite a few partners on [the Energizer contract]," he said. "It's a matter of educating the partners. We have a couple of partner conferences that we'll speak very openly on this and make sure they know what we're doing and why it will benefit them."

Partners will deal with the reality

IT industry partners may not like Microsoft's foray into services, but they'll learn to live with it, said Joshua Greenbaum, principal at Enterprise Applications Consulting, in Berkeley, Calif.

Microsoft CIO Ron Markezich

"They're very lucky that for so long, Microsoft has stayed away from this kind of opportunity," he said. "Nobody is going to really rock the boat here too much. It's in no one's interest to make enemies out of Microsoft taking some service revenue."

At the Microsoft Worldwide Partner Conference in July, the software company's executives are sure to draw questions about future services contracts similar to the one with Energizer, which Markezich acknowledged are in the works.

"We are continuing to evaluate a limited number of diversified customer sites over the next 18 months where it would make sense to implement this same approach to increase our knowledge of how our products work in [customers'] production environments," he said.

However, "It's not something we would go and create a business around," Markezich said.

Microsoft is subcontracting some of the work

One of the things Microsoft is likely to tell partners to allay their concerns is that Microsoft is enlisting them to support such contracts. In the case of Energizer, Microsoft has signed up HP Services to provide the battery manufacturer's users with help desk support. Siemens Business Services GmbH & Co., a unit of Munich, Germany-based Siemens AG, is under contract with Microsoft to provide "desk-side" support, which Microsoft describes as live support for problems that can't be solved over the phone.

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HP Services, which boasts of having 23,000 Microsoft specialists in its ranks, would not provide an executive to comment for this article.

Siemens Business Services, for its part, does not see Microsoft as a threat to its business.

"We have no problems with this," said Wolfgang Foitor, director of software service solutions in Siemens' Service Factory unit in Munich. "In this relationship we are always looking for new opportunities."

Foitor, who has been involved in partnership work with Redmond for 15 years, said Siemens Business Services has about 2,500 Microsoft-certified engineers and other Windows-focused professionals worldwide.

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