Global CIO: 5 More Things Microsoft Must Do

About a week ago, my insightful colleague Paul McDougall wrote a thoughtful analysis of Microsoft under the headline 7 Things Microsoft Must Do. It's a great piece spanning the enormous spectrum of Microsoft's businessfrom Xbox to data centersand I heartily encourage you to take a look.

But to recapture the die-hard conviction of and connections with enterprise-focused global CIOs, Microsoft needs to do even more than what Paul recommended, so as a followup to Paul's analysis here's my list of 5 More Things Microsoft Must Do.

Today's piece picks up on a thread I started several weeks ago called Steve Jobs Is Bugs Bunny But Microsoft Is Elmer Fudd contrasting Apple's aggressive and bold devotion to creating truly breakthrough products versus Microsoft's apparent willingness to plod along at three-quarter's pace, contentedly following others' leads in search, mobile, cloud computing, and most importantly a willingness to deconstruct what it has been so that it can assertively rebuild itself to deliver what the new market is demanding.

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Let me set the stage by listing Paul McDougall's original "7 Things Microsoft Must Do," along with a brief excerpt from each:

1) Cut Windows Prices. ". . . To stay competitive, Microsoft needs to slash Windows prices by 50% or more, or the market will continue to move toward alternative operating systems. . . . "

2) Forget Willy, Free Office ". . . Microsoft must also trim pricing on the enterprise editions of Office and Exchange Server, as, again, rivals like Google are moving in with cloud-based products that are fully functional but much cheaper. Want proof? . . ."

3) Go Deeper Into Services "Yet 2010 must be the year the company puts its $37 billion cash reserve to work in aid of becoming a larger participant. Buyout candidates include . . . ."

4) Ditch The Zune ". . . Despite a bevy of promotional and marketing efforts -- such as custom designs and an HD unit that shipped in August -- Microsoft continues to play the role of also-ran in the MP3 market and that's not going to change, ever. . . ."

5) Buy Yahoo ". . . Yahoo is still the leading Web portal and is the richest site for general interest content on the 'Net. . . ."

6) Shore Up The Executive Suite ". . . It's a critical time, as Microsoft needs to adroitly navigate profound market changes, none more significant than the industry's shift to cloud computing. . . ."

7) Launch A Game-Changer ". . . Why let Steve Jobs have all the fun? . . . "

Some great points in there, and to me, the key word for Microsoft is "great": when did a Microsoft product or innovation take your breath away, or make you say to yourself, "Holy crapMicrosoft's turned that whole business on its ear! There's no way in the world that BrandX can keep up with that."

Microsoft needs to look a few years into the future and identify some essential product types and services it thinks will be absolutely essential, and then commit itself unconditionally to becoming the dominant player in that or those fields. Windows 7, desktop apps, vanilla databases, and a hodgepodge of enterprise apps that most people don't even know exist are simply not going to be compelling and valuable enough to keep Microsoft a top-tier IT powerhouse.

CIOs this year and next are not looking for the same old stuff with slightly lower prices and some new packagingquite the opposite. They are looking for IT suppliers whose ideas and vision are at least as good as their current products, who are forcing customers to stretch their thinking about what's next, and who are delivering the goods that will help CIOs break out of the 80/20 trap, discover if cloud computing is real or nonsense, turn IT from a slow-moving and reactive service unit into a true center of market-focused value, and enable those companies to more more rapidly and with more confidence and with more impact than ever before.

And I believe this list of 5 More Things Microsoft Must Do points in the direction the company must go: 1) Cloud Computing This whole concept, name, and approach rattle lots of folks at Microsoft because it threatens their entrenched territory and, quite frankly, the status they and their products have within Microsoft. What impact will the cloud have on the OS business? The desktop business? What about all those developers at Microsoft: do they do cloud, or do they despise it? Of particular concern is the prickliness Microsoft sometimes displays toward new models or new technologies that customers are eager to explore: recall that as Software as a Service began gaining incredible momentum and potential, Microsoft had to do its NIH thing and call its approach "Software plus Service," as if the company were still an undisputed king-maker and could dictate terminology and platforms by decree.

The ironic thing about cloud computing is that it plays precisely into the outcome that Bill Gates always touted with phrases like "computing for the masses" and his relentless drive to bring down the cost of computing. Over and over, I hear CIOs talking about how various cloud efforts have allowed them to cut deployment down from months or weeks to hours; from days to minutesand oftentimes, the cost implications are equally significant. Microsoft needs to jump into this pool with both feet and no water wings, proudly and loudly declaring it is going to become a cloud champion for customers across all of the company's core areas: the platform side, the connectivity side, the client side, and the applications side. No reservations, no hedging, no qualifications: if Microsoft tries to fudge its way in with a "top-secret 36-month migration/transition cannibalization-minimalization strategy," the quick and the hungry will ensure there's nothing close to a leadership spot for MS to pursue in 24 months, let alone 36.

2) Mobile Enterprise and Mobile Mindset. Mike Cuddy, the outstanding CIO at Toromont Industries, recently shared this big idea for some enterprise and enterprising IT vendor: "The cost of a netbook/low-end laptop is not much different from the cost of an un-contracted smartphone. What do we do with smartphones with they break? We pitch them into the recycle bin and buy new ones. Some IT vendor is going to get the bright idea to help corporate IT manage the future heterogeneous mobile device situation we are evolving to. In the past, we addressed support through standards, and ensuring consistency in end-user devices and software. I don't see how that will be possible the future. We will have many devices, with shorter life spans, with various networking components (wifi, hspa, lta, etc) , and application software that is constantly changing. These will need to be seamlessly managed, and it will not be easy." What better way for Microsoft to show the world it's 100% open? What better way for Microsoft to tie its deep-technology platforms and developer technologies into a massive global growth area? Why can't Microsoft create, manage, and sell the heck out of something it calls "the Enterprise Mobility Cloud," from which people can pull down to their mobile devices the apps, data, documents, files, and video they need across all those conflicting form-factors Cuddy mentions? Microsoft has always said it's in the platform businesswell this could be one a heckuva platform.

3) Data Centers. A few years ago, Microsoft began retooling its entire data-center philosophy to build the new type of muscle mass required to move more and more of its business online. In the course of those efforts, Microsoft has created some remarkable data-center prowess, exemplified perhaps in its mammoth Chicago data center that covers 700,000 square feet (about the size of Rob Preston's house) and cost the company $500 million (we analyzed this facility a few months agocheck out the link in the "Recommended Reading" section at the end of this column). Microsoft's got some other impressive facilities up and running or in the planning stages, and it's certainly looking to aggressively test new technologies and approaches on its way to becoming a world-class operator of giant data centers. And that's precisely the sort of expertise that lots and lots of companies are going to need in our always-on and always-online economyso Microsoft should think about parlaying that internal techie expertise into a commercial business along the lines of Microsoft Data Center Services. It would tie in nicely with the above-mentioned cloud and mobile opportunities, and would put Microsoft once more into a new and high-growth business that allows it to leverage the massive amount of intellectual capital and deep-tech expertise it has within its ranks.

4) Become the SaaS/On-Premise Integration King Everybody says this is a brutal problem, and it's going to get a whole lot worse before it shows any sign of improvement as SAP and Oracle and other applications company begin offering a wide range of SaaS and other on-demand apps to complement their traditional on-premises apps. Is integration a traditional Microsoft competency? Certainly notbut if Microsoft defines its future strategy by its tradition rather than market need, then it's goose is cooked. And look where such a business would place Microsoft: smack in the middle of conversations about enterprise apps (see next item), platforms (check), security (check), connectivity (check), databases (check), and strategici information management a la cloud and data centers (check and check). And I sure think CIOs would sit forward and say, "You're telling me that Microsoft is going to solve this problem for us? I need to hear this."

5) Acquisitions: SaaS, Integration, and Big Enterprise I'll break this out into those three groups: (a) SaaS As noted above, Microsoft does offer a once-promising set of enterprise apps but they're targeted at SMBs (nothing at all wrong with that) and Microsoft seems to have lost interest in making them into game-changers. The new market momentum is toward Web-native SaaS apps that remove a great majority of the pain and suffering typically associated with on-premise enterprise apps: up-front costs, ongoing maintenance, upgrades, training, associated infrastructure, and more. There are a slew of growing and highly capable such companies, including Workday, NetSuite, RightNow, SuccessFactors, and many more. Any of those could provide a major bolt of lightning to Microsoft's intent to be thought as an enterprise-apps player.

(b) Integration: If Microsoft wants to be a player here, it should buy Tibco, which is becoming the Esperanto of enterprise apps and data. Again, this all depends on whether Microsoft is serious about being in the enterprise applications and integration business: seems to me those two businesses have a lot more long-term viability than some of the headed-for-the-stockyard cash cows Microsoft is squeezing to the last drop. In the eyes of customers, Microsoft could go from being one of the many companies that cause ugly integration problems to one that actually helps solve those issues.

(c) Big Enterprise: Acquire SAP SAP is slowly and somewhat agonizingly reorienting itself toward online apps and could very well benefit from some Steve Ballmer intensity in hastening that shift. As valuable as SAP's software and people are, however, the gem in such a deal for Microsoft would be entre to an unrivaled customer set of some of the world's top corporations, CIOs, and IT organizations. Again, this dealand it is admittedly a huge stretchwould zip Microsoft from the outer fringes of global-strategy conversations to being an indispensable part of the highest-level discussions. This one would be a clash on many levels, but remember the fundamental issue here: what does Microsoft need to do be regain its stature as one of the pre-eminent technology companies in the world?

OkayI've showed mine so now you show yours: what does Microsoft need to do to become an indispensable partner to CIOs? Let me know at [email protected].