Ozzie, You Must Transform Microsoft

The writing is on the wall. Every day we all move faster towards the inevitable world of SaaS software, cloud utility-computing and storage, and virtualization right up to and including the software application itself. While we may be at the peak of the hype cycle, it's pretty clear this is where the software and services industry is headed. It is a big shift for Microsoft, and Ray Ozzie's the guy who's got to lead the charge. Microsoft's future depends on it, and much of Microsoft's Software-plus-Services strategy (S+S) success depends on Ozzie.

Where Microsoft Is Making Progress

• Live Mesh. It's the first product with Ozzie's fingerprints all over it. And it brings something fresh and new to the SaaS game: data synchronization. While Live Mesh won't move markets, it is a bellwether move that puts some meat on the S+S bones and gives a view into how Ozzie is thinking Microsoft should play this new game.
• Hosted Exchange and Sharepoint. Good move, because it validates the market for other hosters and says Microsoft's willing to put its money where its mouth is about all the new features in Windows Server 2008 designed to make hosting easier and more efficient. That's standing behind your product.
• Plans for Windows 7. I know everyone's speculating on the next Windows re-write, but I think Windows 7 is all about building on Vista, not replacing it. And those plans likely include extending Vista to better integrate with online Microsoft S+S offerings and possibly some application virtualization. If so, Microsoft will be making some important strategic moves with Windows 7.

What's Still Missing

• Online Office Apps, Google Docs style. Apps are the biggest missing element right now from any externally visible Microsoft S+S strategy. Online versions of Outlook, Word, Excel and Powerpoint. Until then, Google Docs rule the roost with Abobe's acrobat.com apps working to become the #2. Microsoft really needs to do some catching up and get Office Live applications out there before Google wakes up and gets its act together.
• Hyper-V must catch up with the virtualization market. Microsoft's late to the virtualization hypervisor game, but it's not out of the race. Hyper-V must mature, but fortunately Microsoft has also invested significantly in virtualization-management capabilities in System Center and Virtual Machine Manager 2008 (in beta).
• Utility computing strategy, or PaaS. Will Microsoft respond to Google App Engine, Amazon EC2 and Salesforce Force.com? It seems inevitable that Microsoft will have to offer some cloud- or utility-computing on demand so applications stay on Microsoft products and technology.

The Biggest Obstacles

• The Channel. Microsoft's biggest strength is also the biggest question mark: how to transition the channel into the world of S+S. Microsoft's channel is a huge strategic weapon that Google doesn't have. Every other SaaS vendor is asking itself the same question, what's the role of the channel in the world of SaaS? Salesforce has shown how to create an ecosystem around your but no one has yet tackled the channel migration problem. And Microsoft has the most to lose and gain in this S+S version of channel "Extreme Makeover".
• Threading S+S into the Microsoft culture. Microsoft has decades of momentum around on-premises software. SaaS is not only new but also a major shift. It's hard to transition any large enterprise, and Microsoft's no different.
• Simplifying the branding mess around the Live brand. It won't help Microsoft succeed if customers don't know the difference and can't figure out which Live-branded product does what or is intended for them. Be crystal-clear about consumer/retail, SMB and mid- to large-enterprise-grade S+S offerings.

S+S Will Have Arrived When

• We'll know S+S has made huge strides and is mainstream within Microsoft offerings when they offer MCP certifications for Microsoft S+S technology and apps. I'm not saying Microsoft should just offer some "fuzzy bunny" type certification, but a real Microsoft cert for setup, configuration, deployment and management of S+S applications and technology IT can use to build and deploy SaaS apps. Paving the way so the road to S+S is easier for ISVs and IT developers is hugely important, and Microsof't's S+S Blueprints represent a good start.
• Microsoft's online revenues haven't been spectacular, and they've got to turn the corner and show Microsoft is figuring out the S+S revenue puzzle. Ultimately it's about revenue, market share and user mind-share. Those are the measures Microsoft is and will be judged by.

Just listing out a few of these bullet points here makes the job Ozzie and Microsoft face seem a daunting one to me. It's a huge challenge, made only bigger by Microsoft's size and existing momentum. Ozzie's got a huge job ahead of him and I'm sure he knows it much better than I do. But there's no choice, Ozzie's got to transform Microsoft into a leader in the online world of software and services.

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