SAN DIEGO—As Project Green, the multiyear—and multiwave—plan to revamp Microsofts business applications around a services-oriented architecture and unified code base, takes shape, it may be only a matter of time before Microsoft enters the hosted applications services space.
That possibility was discussed by Microsoft Corp. executives at the Microsoft Business Solutions Convergence show here this week.
Microsoft currently relies on partners to host its business applications and sell access to them as subscription services. But as the Microsoft applications move to a componentized model on a services-oriented architecture—planned for 2008—hosted applications services from Microsoft could soon follow.
Doug Burgum, the Microsoft senior vice president who heads the Microsoft Business Solutions group, noted that the company has already had success with hosted services such as its Hotmail e-mail service and Microsoft Network Internet service.
The model could some day be applied to Microsoft Business Solutions applications, he said.
“There may become a time in the future when Microsoft Business Solutions has the platform to make applications available as hosted services,” Burgum said, during a question-and-answer session with reporters and analysts Monday.
But he said Microsoft planned to upgrade its applications infrastructure through Project Green before it made such a move.
“Were not interested in a one-off move. Were working on a broad company strategy.”
Burgum went on to say that he didnt think the demand for hosted application services was that significant despite the success of Salesforce.com, which has racked up 13,900 customers and 227,000 users for its hosted CRM (customer relationship management) application service since launching the service five years ago.
“Salesforce.com has certainly attempted to create demand, but Im not sure that its really there,” said Burgum.
“They have a very underrated sales force thats done a terrific job. If they were selling licensed on-premise software, they may have had the same success.”
Burgum said that the growth rates for Microsofts licensed CRM application, which has 3,500 customers and 70,000 users a little more than two years after it was first released, “are actually quite similar to Salesforce.coms.”
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He reiterated that Microsoft wouldnt “panic” in the face of Salesforce.coms success and would wait until its next-generation application platform was in place before making a move into the hosted space.
Lynne Stockstad, general manager of marketing strategy for Microsoft Business Solutions, said that hosted applications services had experienced only “pockets of success, not mass adoption,” but said that getting into the hosted space was likely in Microsofts business applications future.
“We do expect that,” said Stockstad. “As we move into a fully Web services architecture, thats one of the scenarios we could pursue.”
If Microsoft does move into the hosted space, CRM would likely be the first space it would try.
Brad Wilson, general manager for Microsoft CRM, said that Microsoft CRM is already on a modern, unified code base and supports a fully componentized architecture.
He said most of the Project Green enhancements would come to Microsoft CRM by the end of this year, rather than in 2008 for Microsofts back-office applications.
“Its important for us to be hostable,” said Wilson. “Were not making any communications at this time about when well be delivering hosted applications, but we look at as important to have the ability to support different business models.”
