Microsoft Harnesses EDS Integration Muscle to Move Online Services

| Apr 29, 2009 | Collaboration and Conferencing | Competitive Intelligence Report

| Analyst: Brad Shimmin

Current Perspective: Positive
Vendor Importance: High
Market Impact: Moderate

Event Summary

April 27, 2009 -- EDS, an HP company, and Microsoft Corp. have signed an agreement to market, integrate and deliver the Microsoft Business Productivity Online Suite for enterprise customers. This agreement extends to the cloud HP’s long-standing relationship with Microsoft to provide communications and collaboration services. Together, the two companies anticipate deploying these services to more than 5 million users.

Analytical Summary

• Current Perspective: Positive on Microsoft as its expanded partnership with HP’s EDS moves Microsoft’s newly launched Business Productivity Online Suite (BPOS) up the enterprise food chain. EDS will resell BPOS in conjunction with its own Workplace Services collaboration suite, adding a number of enterprise-class security and administration capabilities including email archiving, encryption, mobile device management and unified communications (UC) design offerings. This will allow Microsoft to pitch BPOS as a more vertically-oriented and enterprise capable software-as-a-service (SaaS) collaboration platform.

• Vendor Importance: Very high to Microsoft, which, while able to market BPOS globally, has done so from a limited number of data centers (located in Dublin, Amsterdam, Hong Kong and Singapore). Because EDS will allow Microsoft to piggyback on its international network of data centers, the company will be able to provide “on shore” data storage across its entire market. HP has also indicated that it will equip Microsoft’s data centers with supportive server and storage hardware in support of this relationship.

• Market Impact: High on the collaboration and conferencing market, which is actively striving to provide multi-channel delivery mechanisms spanning on-premise and in-cloud deployments. This extended partnership puts Microsoft on a more even playing field with rivals IBM and Oracle in targeting large-scale enterprises that wish to blur the lines SaaS, managed hosting and in situ software. The marketing power of this announcement, however, is lessened by EDS’ decision not to extend BPOS’ existing SLA (99.9% uptime),and by Microsoft’s broader partnerships with other global IT consultancies including Accenture and Avanade.

Current Perspective

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Competitive Positives and Concerns

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Recommended Vendor Actions

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Recommended Competitor Actions

• Rivals should point out that while EDS and Microsoft share many points of intersection in terms of technology, EDS still must train its sales force to handle the BPOS offering. Also, EDS will need to do some heavy lifting in terms of building ITIL best practices for BPOS, which is self-imposed requirement EDS employs as an international systems integrator.

• Rivals should note that EDS will lend a number of necessary, enterprise-class capabilities to BPOS customer engagements, including email archiving, encryption, mobile device management, UC design and tech support and mobile messaging. While EDS won’t extend Microsoft’s current BPOS SLA, these capabilities will allow Microsoft to better appeal to large enterprise customers with its SaaS offering.

• Rivals should point out that while Microsoft’s partnership with EDS will help the company extend its global reach for BPOS, it won’t directly improve BPOS itself, as EDS enhancements and vertically-oriented solutions won’t be injected back into BPOS. EDS will work with Microsoft as a partner to provide those capabilities to Microsoft BPOS customers, but this approach places EDS and Microsoft at odds in seeking direct customers for BPOS.

• Oracle should view this announcement as an opportunity. EDS has stated that not only is this not an exclusive arrangement with Microsoft but that the vendor is also interested in replicating this approach in expanding its capability to deliver cloud-based services to its customers. Given Oracle’s work to tie Beehive to its line-of-business applications, a partnership with EDS would give EDS the ability to deliver collaboration-enabled solutions covering CRM, ERP, ECM and others.

• IBM should continue to build out its recently launched LotusLive product family, moving quickly to add Web-centric messaging capabilities to LotusLive Engage via its Outblaze acquisition. This will help IBM better address the SMB market and provide a growth path for Lotus Notes customers other than Exchange Server, a serious concern given EDS’ background in supporting Lotus Notes customers interested in migrating to Exchange. The company should also deepen its partnership with SAP, building on its recently launched Alloy solution as a means of countering Microsoft’s and EDS’ joint work with Microsoft Dynamics CRM.

Recommended End User / Customer Actions

• Potential customers with concerns regarding EDS’ expertise in managing with BPOS technologies should rest assured that EDS has both the experience with and the ability to manage a large number of Microsoft-oriented customers via its Workplace Services offering. For example, the company currently manages more than three million Exchange Server users and one million SharePoint Server users.

• Existing EDS Workplace Services customers should welcome this extended partnership with Microsoft, as it will afford a much more flexible approach to cloud computing in which Microsoft collaboration software can be constructed, deployed and managed in-cloud with either a SaaS or managed hosting configuration, all under the watchful eye of a single vendor, EDS.

• Potential EDS BPOS customers should note that EDS intends to employ Microsoft’s pricing structure for BPOS as its starting point. This approach will retain the value of Microsoft as a provider of pure SaaS software, allowing customers to purchase BPOS services either directly from Microsoft or through EDS without concern over price discrepancies.

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