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March - 2003 - issue > Cover Story
Microsoft And The Enterprise
Karthik Sundaram
Sunday, July 6, 2008
MUCH OF HUMAN PROGRESS HAS COME ABOUT because someone invented a better and more powerful tool. Informational tools are symbolic mediators that amplify the intellect rather than muscle the users...A great deal of work now involves decision making and knowledge, so information tools have become, and will continue increasingly to be, the focus of inventors,” wrote Bill Gates in The Road Ahead.

In the last half-a-decade, the metaphorical road saw numerous traffic jams, overtakes, crashes—and now debris that is slowly clearing up—as enterprise software companies, big and small, hacked up markets; selling stand alone products supported by long hours of consulting. In all this, the rationale at Redmond, WA was to wait and watch. Finally, as the road shows signs of clearing and there is now a dire need for some sane methodology to keep up the traffic flow, Microsoft is gearing up to move in.

At the recent Comdex, Gates announced that the company intended to pursue development in Web Services as a core business strategy. “Interconnection needs to be done around one architecture. Not one architecture for e-commerce, one for management, one for interoperability; a single architecture, applied very broadly. For Microsoft, this is the center of our .NET strategy. This is what we committed our company direction to be several years ago. It’s a very profound commitment. We had to rebuild Visual Studio to release the .NET version early this year. We’re doing substantial rebuilding in our database to not only support XML, which we already do, but to bring XML into the core of that database,” said Gates, in his demo-laden keynote.

In 2001, when Microsoft released Visual Studio.NET, it marked the seriousness of the giant’s intentions in the business.

.NET Evangelist: Parthasarathy
Well-known for building low total cost of ownership (TCO) solutions for the desktop and the enterprise, Microsoft is playing out its time-tested strategy again in the enterprise application space. Productivity, flexibility, connectedness (linking customers, employees, and business partners)—all three platforms designed to deliver a low TCO—form the core of Microsoft’s enterprise technology strategy. In the past few years, a new technology has emerged and matured that—Microsoft feels—will deliver enhanced productivity, flexibility and connectedness, while lowering the TCO. XML Web Services’ time has come, says Sanjay Parthasarathy, corporate Vice President of Strategy and Business Development Group, who also plays evangelist to the .NET platform developer community. “.NET is an ingredient,” explains Parthasarathy. “You can think of Web Services as the underlying technology, and .NET as Microsoft’s method for making it happen.”

Viewed as a multidimensional entity within the company, XML Web Services takes up many avatars. “XML can be viewed in three levels,” says Parthsarathy. “At one end, it is considered to be a schema to represent data. Then it is a protocol to do distributed programming, and is also a service architecture.” In July 2000, Microsoft announced that the next big thing it was placing its bet was on XML Web Services, and raised the curtains on .NET (formerly Next Generation Windows Services).

“Quite like how Windows made computing for users, .NET seeks to make distributed computing available in large scale,” says Parthasarathy. At the basic level, XML Web Services simplifies the process of connecting different systems—say a mainframe to a UNIX box to a Oracle server and so on. With a host of standards and technologies to back it up, XML appeared to be the strongest tool for integration that Microsoft sought to leverage. The distributed programming strength gives XML the unique advantage, declares Parthasarathy, where every piece of software, hardware, and network will become programmatically accessible. Secondly, as enterprises store large amounts of disconnected data, knowledge is lost. XML resting throughout the network can connect up these data blocks and build knowledge base. This could lead to information exchange that would power competitive advantages, response times and other such business critical issues.

“In a single statement, .NET is software that helps connect data, systems, people, devices using XML technology,” says the Microsoft evangelist. “The key here is to focus on the connect.” Just like GUI is not a product, Microsoft views .NET as a concept, a system, or an environment. To ensure .NET's acceptance in the industry, Microsoft plans to spend $2 billion over the next three years to help its partners and corporate IT developers build .NET services. Over the next 10 years, Parthasarathy says, XML Web Services will be integral to enterprise application. Not just that, the giant has developed strategic ties and works closely with integration service providers like Infosys and TCS, where the .NET platform is extensively used in delivering solutions.

There are doubts, though, that while XML is good at the surface level, it collapses when there is a failure or a response time element in the integration. The team at Redmond is quick to claim that it is quite the contrast. Banking clients in Denmark, says Parthasarathy, have replaced the Tibco platforms with XML Web Services—in transactions, routing, and messaging. While not there yet in terms of age, Microsoft clearly feels that Web Services’ capabilities are quite varied and powerful.“We amazed people with the simplicity of the product, and the sheer clarity in wielding the Web Services platform,” recalls Parthasarathy. Code written in the old style would directly be implemented into Web Services, with the help of check box tools in the Visual Studio.NET. Web Services was implemented into the product, making it native to it. Today, Microsoft is planning a host of next generation releases of all its Windows products, that are Web Services-enabled, and is also building out tool kits for other software. The immediate way out, says Parthasarathy, is to start with building interfaces, and go native in the next two or three releases. While not yet in the league of an IBM or a Solaris, the last two quarters’ figures show satisfying growth results in the .NET implementation strategies for the company. “Sometimes reality lags behind,” laughs Parthasarathy, “we are getting there in our time. No one expects a complete change from standalone software systems to web services to happen overnight—or even in the next year. It may take ten years or more. ”

Small Business Is Good Business: Nadella
In true Microsoft fashion, the strategy in XML application has focused more on the small businesses. “That person who runs a $1 million business is our target,” says Sathya Nadella, corporate vice president responsible for leading the Product Group within Microsoft Business Solutions. “There are millions of them, and they are not ready to spend a quarter million on an integration solution.” A new business in the Microsoft stable, the Business Solutions group was started by acquiring Great Plains for about $1 billion and Navision, another company in Denmark.

Nadella has spent numerous months in the last couple of years, observing business processes at small businesses. In mapping how information and decision making flows within and between companies, processes like emails, faxes, orders, and so on are now finally clubbed into four or five core processes—product/service, generate demand, fulfill demand, plan/manage enterprise. These four cores lie on the key layer called collaboration. “A typical office manager has about 20 post-it stickies around the PC monitor, a couple of file boxes, a fax and some more notes,” observes Nadella. Microsoft is not giving the manager solutions to file all these information. On the other hand, it is deriving solutions that would take away all these unlinked information models from the manager’s decision making process, and group them into a smoothly transitioning business software. Nadella’s group just released its first 100% .NET-compliant piece of software, Microsoft CRM. “The person would most probably be using MS Outlook,” says Nadella. “He or she wouldn’t even know that the underlying software is a CRM tool. But the person can now do a lot more with his email—generate and complete an entire order, and rack up the tally on the corporate inventory. The CRM would be working on the enterprise server or on some third-party server.” Custom-fit software at commodity prices, seems the strategy. Instead of viewing a business application as an end-user application, the shift towards thinking of it as a developer platform with developer application mixed is apparently the strategy now. “At one level, the user himself should be able to customize the software, at the second level, the vanilla flavor software could be combined with other products by the value added reseller (VAR), and finally, consulting companies could work on larger customization,” reveals Nadella. Microsoft is envisioning a world where the business application can be customizable at various levels, where the process is truly reflected in the implementation of the IT system.

The move is quite natural, says Nadella, considering the OS and some of the basic tools in the small business environment is already Windows. “Anybody can come up with a business software. But we are already sitting on the desktop, and to build a back-office environment is a logical business progression,” observes Nadella. “Think about a spectrum of tools from Visual Studio to Office. If we manage to connect all the dots, we are going to be winners.” As for why Microsoft is so hot for smaller business customers, the answer appears to be that the company sees the low end of the market as wide-open, underserved territory.

Windows Warrior: Somasegar
Fear of Microsoft largely explains why many of its big rivals have aligned themselves with J2EE, an alternate web-services platform using Sun’s Java programming language. “That can’t and won’t be true,” says Sivaramakichenane Somasegar, corporate Vice President for the Windows Engineering Services Group. Somasegar is leading the effort to make next generation server products Web Services-enabled, and make it native to all Windows products. In many instances, Microsoft has opened code access to clients, and it has not become mandatory to possess a Windows environment for intra-business conversation. “This is true, especially in the case of government clients, where they have full access to our code in view of their special needs for security,” says Somasegar.

There is also the compelling attraction of adopting LINUX—open source, easy customization, adaptation, and so on. “Windows 2000 was our first foray into the enterprise class, and has been a very good success,” counters Somasegar. In a planned launch of Windows 2003, he assures that many wrinkles in the 2000 version have ironed out, and a host of new features on the server-side application have also been added. “The robustness of the product is really compelling.” Quite logically, Microsoft has also built in the .NET into the server platform, pulling the product to the next level of evolution.

At the last Comdex, Gates also went on to launch a new initiative in his dream for the Digital Decade—Trustworthy Computing. Addressing the four crying needs of today—reliability, security, integrity and privacy, Microsoft has apparently commenced company-wide thought culture developing end-user products that are safe—to the user and his environment. Last year, the 7000-strong Windows engineering team spent 10 weeks analyzing security issues in his or her project in the system. After six months of post-detection fixing, Somasegar declares, the Windows 2003 is really stronger than any product in the market today.

It may not be possible to see a second revolution like what Windows did on a PC, but Microsoft clearly understands the markets it plans to take on. “Over 90 percent of the world’s businesses are less than $10 million in size, which—till today—could not dream of affording the sophisticated products or processes of a large corporation,” says Somasegar. “If we build robust products for this market alone, we will be in business for some years to come.” The world of business automation is infinitely complex. Specific industries have specific software needs that Microsoft does not want to be involved in. That said, vanilla-flavor tools would definitely meet the current needs, and if the .NET component takes off, a small company will have the ability to conduct it’s business in a very sophisticated manner, with it’s manpower investment intact.

Yet as obvious and sensible and incremental as this all sounds, the move to web services is not going to be pleasant for everyone in the IT business. It undermines the industry's most cherished asset—to wit, the fact that it has its customers over a barrel. High switching costs are what the software industry is built on. Ad hoc fixes to get disparate systems to work together are what keep countless consultants from going hungry. Landing a few multimillion-dollar contracts is so much more gratifying than countless piddling sales of interoperable modules. So why would an IT company want web services to happen? The answer is that it's better than the alternative, which is long, slow oblivion. It's a mandatory gamble.

Will Microsoft be able to shake off these fears and industry gripes and deliver on it’s promise? Will the .NET be a true enterprise-wide interoperable “ingredient”? As Sanjay Parthasarathy and Sathya Nadella say, “We need a culture change for this to happen. At least, this time, we have the time.”

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