Microsoft: Commoditising managed services
Published: 12 Jul 2005 12:25 BST
Staying clear of IBM
Microsoft's experiments in managed services are meant primarily to improve customer satisfaction and lower support costs, rather than unseat IBM's massive Global Services organisation, said Forrester Research analyst Julie Giera.
"Microsoft doesn't have any plans to become the next IBM Global Services," Giera said. "They are certainly trying to figure out how customers can avoid problems with Microsoft software, how they can run it more effectively and efficiently and figure out their role in that."
Giera said that Microsoft's reputation suffers when customers have a poor experience with the company's software, even when the problems may lie with another supplier.
She added that there is a market need for standardised and cheaper managed services, particularly among small and medium-size businesses.
For its part, IBM Global Services is also trying to nab more midsize customers. Earlier this year, it launched a programme to partner with smaller, regional consulting companies that cater to the midsize market.
At the same time, IBM is pursuing higher-end services centred around its business management consulting division.
By emphasizing these business-consulting-led engagements, IBM is seeking to differentiate itself from competitors and evade the price pressure on common outsourcing services, analysts said.
Indeed, Dell's entrance about four years ago into the market for "PC deployment" services around its hardware has pushed down prices, Giera said.
"Software and services are becoming commoditised markets. Dell has pushed hard to commoditise service and bring down the price," she said.
Ballmer recognised that Microsoft Consulting Services, or MCS, does pose potential competitive conflicts with its partners. But, he said, its standardised managed-service approach offers a better opportunity for partnering than IBM Global Services.
"I know there's always a lot of controversy around good old MCS," he said. "We say the same things, you ask the same questions, it goes on every year. But our 4,000 little MCS people is not what it's going to take by themselves to compete with IBM."
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