Partners Await Managed Services Impact

Microsoft is looking at how best to package its managed services for customers, a move the company hopes will drive it deeper into the services arena.

Microsoft Corp. is looking at how best to package its managed services for customers, a move the company hopes will drive it deeper into the services arena.

The effort will pit the software maker against partners it once supported. Some of those partners are concerned about the prospect of competing directly with Microsoft. But users say the strategy could serve a need for comprehensive support.

Microsoft CEO Steve Ballmer said it is too early for partners to panic. Although Ballmer said he believes managed services need to be offered as a product, he doesnt "yet know where that takes us."

Currently, the Redmond, Wash., company is trying to discover what it means to do an engineered, managed desktop service, Ballmer said. "But were finding that we can probably both engineer additional tools and make a bunch of simpler default assumptions and engineer a bunch of management control capabilities that will make it a lot easier to deliver lower-cost managed services. There is a lot of opportunity there," he said.

Microsoft already has a pilot program with Energizer Holdings Inc., in St. Louis. That program lets Microsoft keep some 6,000 desktop systems up-to-date by downloading patches and deploying the latest software, managing e-mail and electronic document storage and the associated servers, and providing help desk and other end-user support.

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The challenge for Microsoft, however, is determining how to package this service and how to involve the vendors partners in the process, whether that involvement means allowing them to sell the service or to add value to it.

Some partners said they believe this move is more about Microsofts maintaining its dominance on the desktop than about competing with them in the broader service-provider space.

"This is a low-risk extension to their current desktop services to enable a better enterprise solution for the desktop," said an executive at one of Microsofts largest ISV partners, who requested anonymity.

Some enterprise customers, such as Charles Kramer, chief technology officer at Social & Scientific Systems Inc., in Silver Spring, Md., understand Microsofts partner concerns. "This is another area to make those partners a bit nervous," Kramer said. "They are wondering if Microsoft will do to them in the services area what it has done to partners in the development area."

Since Microsoft had relied on its partners for so many years, there is tension in some quarters concerning the role of Microsoft Consulting Services going forward, Kramer said.

Even so, Microsoft has continued to build into its software manageability and support functions that many of its partners "just do not know how to properly implement," Kramer said. He cautioned that the costs and contractual terms for such a product will be key in determining its success among enterprises.

Kramer said he would like to see a completely managed service that includes all software licensing and upgrades, similar to the Seat Management contracts that the federal government has been trying to implement.

Such an offering must include patch management and installation—in short, everything. "Microsoft would also obviously need a hardware partner or some strict criteria on the systems to be supported. I will be very interested in reviewing the cost/benefit argument for such an offering to see what Microsoft touts as the total cost of ownership of the service," Kramer said.

Ballmer declined to put a time frame around such an offering. "Were working on it now, and when we have something to say, well tell you about it," he said.

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