Put yourself in Steve Ballmers shoes. With antitrust suits looming, youve been forced to ask yourself what a variety of judges and prosecutors would think about every major move you might make. But, following a settlement with the Department of Justice, the legal clouds have begun to lift, and youre freer now to act than any time in the last four years. So what do you do?
Youd probably start looking around for new markets to conquer and, with $40 billion or so in the bank, maybe a few acquisitions. And thats exactly what Microsofts CEO is doing.
"I put out a memo where we talked about our mission, where we talked about the fact that were going to do new things," said Ballmer in an interview with eWeek editors and reporters at Microsoft headquarters here this month. "We were quite explicit that we need to enable new scenarios for our customers, which take us into new areas which could be [through] acquisition, could be [through] incubation," Ballmer said. Microsoft is looking at possible acquisitions in the areas of storage, security, and management and developer tools.
Not to say that Microsoft, even before last months ruling effectively settling the DOJ antitrust action, wasnt already entering new markets. This year, the software company has launched the Tablet PC, embedded Windows, enterprise applications and content management. Not to mention Microsofts full-court press to explain and sell its .Net initiative.
But, before taking off the gloves and expanding even more aggressively, Ballmer and Microsoft have some work to do shoring up strained relationships with enterprise customers. Still stinging over Microsofts controversial Software Assurance volume software licensing terms, as well as ongoing security, reliability and complexity problems with Microsoft products, many enterprise customers say the company must improve its fundamental business practices. If that doesnt happen, some vow, theyll continue to put the brakes on upgrades and even consider alternatives such as Linux.
"We wish theyd concentrate on better security and fewer bugs rather than continuously focusing on new features," said Kevin Baradet, network systems director at the S.C. Johnson Graduate School of Management at Cornell University, in Ithaca, N.Y., and an eWeek Corporate Partner. "Look at Office. Ninety percent of our people use 10 percent of the features. If we could get something less feature-rich and more secure, we wouldnt have to spend as much time writing around and patching problems."
Although Microsofts new Software Assurance program succeeded in getting up to three-quarters of enterprise customers to switch to long-term maintenance agreements, according to analysts, many IT managers are still steaming over what they see as a heavy-handed Microsoft tactic, which many say costs them money.
"They alienated most of their enterprise customers with the insistence on the new licensing model. Companies that might never have considered looking elsewhere have begun piloting Linux and [Sun Microsystems Inc.s] StarOffice," said Michael Skaff, manager of IT and the network operations center at AdSpace Networks Inc., in Burlingame, Calif., and an eWeek Corporate Partner.
Meanwhile, customers such as Skaff are unhappy that, rather than buckling down to fix such problems, Microsoft is looking beyond its core product space for growth. "I think [Microsoft] is being greedy," said Skaff. "Instead of improving and revising within their current area of strength, they are looking to expand into new areas of opportunity," said Skaff. "Those are ... resources that will now be directed away from delivering better value to the enterprise."
Somewhat uncharacteristically, top Microsoft officials have begun to publicly own up to mistakes that have soured relations with some enterprise customers and to promise fixes. On software licensing, security and initial attempts to define its .Net strategy, company officials now admit some serious miscues were made. Perhaps most harmful to its relationship with some enterprise customers, said officials, was Software Assurance. Not just the terms of the new plan but also Microsofts attempts to roll it out quickly, before many companies could gracefully factor it into their asset management processes. While Microsoft isnt going to roll back Software Assurance, the company is attempting to make it more palatable to customers.
Microsoft officials even acknowledge that enterprise displeasure with Software Assurance may slow adoption of key new products such as the upcoming Windows .Net Server 2003. "It could have," said Paul Flessner, vice president of the .Net Enterprise Server Group. "There were plenty of customers that were unhappy. Honestly, there were plenty that were happy. But there was a fairly vocal minoritymaybe 20 or 30 percentthat did see an increase."
But Microsoft has plans to appease what Flessner calls the vocal minority by adding to Software Assurance limited training and support, at no additional charge, according to Mike Sinneck, corporate vice president for worldwide services.
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Besides attempting to fix Software Assurance, Sinneck has been busy, among other things, revamping Microsofts 6,000-person support organization. By introducing new triage and escalation procedures, Sinneck said he has been able to improve support to the point that 80 percent of customer problems are resolved within seven days. At the beginning of the year, the number was 50 percent. Microsofts goal, said Sinneck, is 98 percent.
In addition to striving to fix perceived software licensing and support shortcomings, Microsoft officials said, although many IT managers may not yet acknowledge it, the company is finally getting a handle on the security and reliability problems that have chronically plagued product lines Windows, Exchange and Outlook.
The companys Trustworthy Computing campaign has led to the creation of a Security Business Unit. And that unit has been overseeing a systematic push to ingrain security consciousness into all the companys product units through training, new software development practices and organizational structures. So far, said Craig Fiebig, general manager of SBU, 11,000 Microsoft employees have gone through the security training. And, within the product groups, individual developers have been given security responsibility for specific software modules in Microsoft products.
Various product groups at Microsoft are also attempting to build in better reliability in addition to better security. The upcoming Outlook 11 messaging client, for example, will recognize the speed of the network over which its connecting with an Exchange server and adjust accordingly. Still, the only valid way to evaluate Microsofts Trustworthy Computing campaign is to look at whether fewer vulnerabilities are turning up on the companys platforms. And, so far, many enterprise customers remain unimpressed as flaws such the recent hole in the Windows 2000 and XP Point-to-Point Tunneling Protocol continue to appear.
Microsoft officials also admit they have stumbled in at least one other task that is key to the companys mission: helping IT managers not only understand the companys .Net initiative but also giving them compelling reasons for adopting it by migrating quickly to .Net-enabled platforms and tools.
Two years ago, when the company introduced .Net, Microsoft made two mistakes. It failed to make clear that it was committed wherever possible to supporting Web services standards such as SOAP, or Simple Object Access Protocol, and Web Services Description Language. And, it placed too much emphasis on the distant consumer benefits of .Net/Web servicesto be delivered through self-describing Web-born services such as Passport and HailStormat the expense of the more immediately feasible benefits to enterprises from using Web services for behind-the-firewall integration.
Now, Microsoft executives are not only emphasizing integration, but theyre also pledging allegiance to Web services standards such as those being developed by the Web Services-Interoperability organization. The idea, said Flessner, is that Microsoft will support Web services standards while pushing its own APIs in those niches where standards have not yet appeared.
"The big opportunity in my mind is going to be around this end-to-end diagnostics and services management," said Flessner.
Microsofts refined .Net message may finally be getting through. Not only can the company point to a few enterprises such as Bank of New York Company Inc.s European Fund Services Group and Deutsche Bank AG that are beginning to use technologies such as Visual Studio .Net to deploy integration-oriented systems, but also Microsofts own product groups are finally beginning to bake XML into their offerings. One leading example is Microsoft Project. (See story.)
But what about Microsofts broader message: that company executives recognized they stumbled on software licensing and other issues but that they intend to do better by enterprise customers? While many are skeptical, others are clearly willing to give Microsoft another chance.
"Sure, they arent perfect, but then no company really is," said Randy Dugger, formerly IS director at Sequus Pharmaceuticals and now a consultant, in Menlo Park, Calif., and an eWeek Corporate Partner. "With all the different permutations of hardware and software, I just dont believe you can fully make everything work all the time."