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Microsoft barrels toward a services world

Microsoft's Steve Ballmer made it clear that Microsoft's future and the future of IT in general is one where services are the predominant platform.

DENVER -- Although software services don't yet register with the vast majority of corporate IT shops, Microsoft is developing its "services platform in the cloud" with an effort similar to the development that went into the desktop OS.

At the Microsoft Worldwide Partner's conference here this week, Microsoft CEO Steve Ballmer talked up the company's services strategy. He gave few details surrounding the company's software plus services platform though he said it would be built on .Net and Windows.

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To make software as a service a reality, desktop PCs, enterprise computing, the Web and devices will all have to evolve, while still maintaining a rich client experience, Ballmer said.

"Rich clients need to come as close to click and run as Web applications built on HTML today," he said.

Ballmer acknowledged that it will be years before software plus services becomes predominant with many unwilling to relinquish control of their computing environment. Down the road, Ballmer said these users will be considered "troglodytes" compared with those who have moved to the new world of server farms.

"Services will be delivered from server farms that are managed on a huge global scale with the ability to move capacity up and down on-demand with a new management model," Ballmer said. "More and more back-end computing will not be done on premises but on these large farms and hosting centers."

Partners think they will be able to sell IT shops on the idea once they understand the benefits. The transition to services versus on-premise will be a gradual one beginning with enterprise customers, said Bill Barmes, small business specialist with CompNet Systems Inc., a Microsoft partner based in Boise, Idaho.

"Our clients aren't really aware of [software as a service], but I think once word gets out, watch out," Barmes said. "We will sell clients on it."

IT managers are looking to cut down on tasks and view software as a service as a means of getting there, said Robert Wise with Microsoft partner InterCall in Chicago.

"IT staffs don't want to take everything on themselves, perpetually having to patch and upgrade," Wise said. "There are a lot of reasons they're looking at software plus services."

Hosting is already taking off for Integrated Digital Technologies Corp. in Pasadena, Calif., in such areas as hosted Dynamic CRM, said Juan Rodriguez, the company's CEO. Rodriguez said he views software as a service as a natural next step for his customers. Yet large companies still want to maintain control, for now, and work with his company on a consulting basis, Rodriguez said.

Microsoft is under growing pressure from Web-centric companies, such as Google, that are eyeing the lucrative enterprise customer base. Google has been incrementally tweaking its services to appeal to business customers.

Earlier this week, Google snapped up Postini Inc., an email security firm, for $650 million. Postini will give Google a tinge more credibility when selling services that can meet customer demands for regulatory compliance.

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