Is the time right for Microsoft Online Services?

Where others have fallen short, Microsoft hopes to conquer the online services market with its message of savings and flexibility.

Microsoft wants enterprises to have it all. If an IT shop wants to keep some email servers in house but host an email system for road warriors, Microsoft says it can do the job.

Microsoft this week launched new online services for Exchange and SharePoint and Communications Server Online, which is due out in 2009. What is unclear at this point is when its Azure "Windows in the cloud" operating system will play a role in Microsoft's far-reaching Software + Services strategy. As it stands now, the new Exchange and SharePoint Online Services would be hosted in traditional data centers.

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That's not so new, but what is new is that Microsoft has gotten its productivity applications to the point where users with Web-based versions will at least experience the same look and feel as the applications installed on PCs.

For IT administrators, setting up a new user in SharePoint Online or any of the other Microsoft Online Services is straightforward. IT can set up one user account to straddle all of the Microsoft Online Services and authenticate across the Web-based services using Active Directory.

Saving money is the point

But ease of use was not Microsoft's big message for administrators. Rather, the company wanted customers to know the online services could save them a bundle of money and meet the ever-changing needs of a mobile workforce.

Utility computing and other models, such as application service providers had a similar message. Spread cost out across the data center, pay nothing up front but over time, and it can be accessed over the Internet from anywhere. But those models were flawed in that many of the applications offered by ASPs and the others weren't built for the Web.

With that obstacle overcome by Microsoft and others developing technology specifically with Web-based apps in mind, the simple answer might be that the timing just might be right.

More flexibility with Online Services

Google Inc., for one, has piqued people's interest in the concept of choice and flexibility with Google Apps and Google Docs. The drawback for enterprises is lack of technical support and service-level agreements from Google.

"I wouldn't be surprised if there is a lot of pent-up demand because users have been looking at Google [Web-based productivity apps], but IT needs guaranteed uptimes, SLAs and quick turnaround on support," said Andi Mann, an analyst with Enterprise Management Associates Inc., a Boulder, Colo., consulting firm. "Google does provide great email and lots of storage but they don't guarantee the things IT needs."

Microsoft is offering both, and it is doing it at a time when companies want to get rid of capital expenditures. Enterprises can realize 10% to 50% in savings if they use its online services, said Stephen Elop, president of Microsoft's business division. He runs the information worker, Microsoft business solutions and unified communications groups.

Mann agreed that enterprises might want to put off capital expenditures and push that more into ongoing operational expenditures. So, in essence, instead of buying servers up front, they are buying services over time.

IT shops appear to be checking out the online services. Before the official launch of Exchange Online, Microsoft sold more than 500,000 seats, according to Elop.

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