Why a Deregulated IT would actually be good for Microsoft

Following my previous post, some (internal and external) folks have asked me why I was performing seppuku by sharing my thoughts on Deregulated IT 🙂

Their premise was that deregulated IT, taken to its logical conclusion could (would?) disrupt several Microsoft franchises such as Windows Server and Exchange. By embracing consumer grade assets for part of the enterprise IT portfolio, this model would drastically lower the number of CALs (one of the primary revenue generator in the enterprise for Microsoft) required to run large IT shops and therefore negatively impact Microsoft revenues.

Here is my reply to that:

(1) I am not the one disrupting the current model, smart CIOs considering it are. I am just a messenger or maybe more accurately a “generalizer” of the “one size doesn’t fit all / consumerism” trends; which means that, whether I blog it or not, this type of hybrid IT will happen anyway. Also, although a flattering thought, it is hard for me to imagine many CEOs enacting the IT Deregulation Act just based on my post. If they were… man, I am in the wrong job! I should enter politics and/or redirect my mighty CEO-controlling powers to prevent global warming or something similar. 🙂

(2) From a revenue perspective, I am not buying the argument that total revenues would be lower. Revenues from a particular big IT shop might go down, I would give you that, but the deregulated IT function has to be performed by someone, somewhere. The performers of the deregulated IT functions (hopefully on top of a Microsoft platform) would partially compensate for “un-purchased” CALs (Microsoft will need to show why and how to do so on the Microsoft platform of course) + Microsoft would have new revenues streams from the big IT guys (or monetize it through advertizing) when the deregulated function is performed by Microsoft (e.g. MSN Messenger, CRM Live etc.). So, although not able to offer a real comparative study, my point is that I am not accepting (at least in principle) the notion of total revenue going down.

(3) Also, as mentioned in my blog subtitle, I am a dotcom refugee happily expatriated at Microsoft, hence I would rather see Microsoft show thought leadership in this space and “own” the change by helping the transition happen from a best practice perspective and of course a product/platform perspective (more about this in my final point); instead of doing the “ostrich”.

(4) Finally, and most importantly, I believe that only Microsoft has the platform breadth to support/enable the Deregulated IT. Of course all the pieces are not there yet (which is OK as no one is really doing it yet 🙂 but many are. In a deregulated IT space, Microsoft would be the one with the most compelling offering; without entering a complex Microsoft-compete discussion, other enterprise vendors (think IBM/Oracle/SAP and the like) would be at a competitive disadvantage. Although fierce competitors in the enterprise space, they lack all the consumer properties (think MSN messenger, MSN Live Hotmail (or whatever it is called these days)) that Microsoft also has. On the other end of the spectrum, a company like Google, which I hear has some quite successful consumer web properties, lacks breadth in enterprise grade service offerings and in my opinion, even more importantly, lacks a suite of server products allowing “on premise” deployment as well as supporting a “build” strategy when necessary.
The world will be hybrid. It won’t be cloud-only or on premise-only; it will not be browser-only or rich-client only… the right mix will be determined by maximizing a cost/value equation whose most important variables will be control, cost efficiency, flexibility and compliance. Therefore, the more hybrid the world is, the more critical it is to rely on a platform covering both enterprise and consumer spaces as well as being able to offer servers and services. And as far as platform breadth is concerned, Microsoft is still far ahead any competition.

Anyway, enough about the theory. I am quite motivated now, to use the next few weeks trying to “put my money where my mouth is” and:

a) Define an hypothetical example of partial deregulation, most likely around email

b) Propose a high level architecture, describing the new requirements and challenges

c) See how Microsoft platform would support/enable it



If you are a big honcho in a big enterprise IT and you are interested in exploring all this in more details. Feel free to get in touch with me (gianpc (at) microsoft.com).

Comments (1)

  1. orcmid says:

    I once worked in a place where they talked about “the franchise.”  It’s a pretty baren notion, because it involves not trusting customers to know what’s good for them and also fearing that your own products are not good enough without it.

    That makes “protecting franchises” not only pernicious, but suicidal.

    Any enterprise that depends on some flavor of lock-in to maintain customer “loyalty” deserves what will happen to it in the long run.  

    I am not claiming that Microsoft is in that position, but the languaging around “the franchise” should be an alarm bell for those who understand that, ultimately, the customer always decides, as you point out so well.