Building Blocks For Office Dominance

operating systems Microsoft Office interface

Building atop Office offers two key advantages: ISVs can potentially trim development costs by exploiting existing functionality, and end users like the user-interface familiarity and easy integration Office-based applications offer. That combination can be a profitable one for solution providers.

Legal software developer Client Profiles, Atlanta, decided three years ago to rebuild its case and contact management applications atop Office, tearing out its existing, back-end infrastructure in favor of Microsoft's. Custom applications allow developers to more closely tailor their software to precisely meet client needs, but in the end, Client Profiles' customers consistently preferred the simplicity of the Office interface, according to CEO Whit McIsaac.

"Our original application would take transactions out of our law-firm calendaring system and push them into Outlook. It was a constant struggle to enhance our application, keep up with Outlook, and keep the integration going between the two," McIsaac said. "What we ended up doing was turning off our calendar and launching Outlook directly from within our application. The tools available now are way different than what we had early on. We argued it—why does a law firm want to use Outlook as a document system even though it couldn't do all this stuff? We argued it, but they wanted to use the familiar interface."

The switch has paid off for Client Profiles: Revenue in 2007 was around $12 million, McIsaac said, twice what the company generated in annual sales three years ago. He credits the new infrastructure as a major contributor to the spike in business.

"The way we're doing the integration with Office these days fits in better in larger practices," he said. "The number of deals and the size of the deals is going up."

Microsoft hopes more ISVs will heed the Office siren song. In February, it will host the Microsoft Office System Developer conference in San Jose, Calif., with Bill Gates keynoting. This year marks the first time the annual gathering has been open to the general public; Microsoft expects at least 2,000 to attend. The conference climaxes a steady rise in marketing moves and technology releases intended to coax more ISVs into the "Office business applications," or OBAs, market, as Microsoft calls software built atop its Office infrastructure.

In July, Microsoft launched OBACentral.com, a tools portal and product showcase for OBAs. And in November, it released Visual Studio 2008, the first version of Microsoft's flagship IDE to include its Visual Studio Tools for Office (VSTO) technologies, previously sold separately.

Microsoft Product Manager Jay Roxe recalls the enthusiasm that announcement elicited when he disclosed at a developers' conference that VSTO would be built into Visual Studio 2008: "It's one of the few times at a presentation I've had spontaneous applause," he said with a grin.

VSTO has also been substantially updated. The new release marks the introduction of visual design tools for Outlook development, bringing it to parity with Word and Excel.

Next: More People Building Office Applications "We wanted to say, 'OK, Office is now a part of every developer's quiver,' " Roxe said. "We expect to see more uptake of this, and more people building Office applications."

That's a message being pushed at the top level at Microsoft, Redmond, Wash. In an interview this past summer, Sanjay Parthasarathy, corporate vice president of Microsoft's developer and platform evangelism group, said he wants to see all of Microsoft's software partners leveraging Office's ubiquity. "I basically think every ISV needs to have an OBA solution and every enterprise application needs to be built as an OBA," Parthasarathy said.

One high-profile partner responding to that challenge is SAP. In mid-2006, it introduced Duet, an integration application jointly developed with Microsoft. Duet turns Office applications into the user interface for SAP systems for back-office functions like CRM and supply chain management.

Duet 1.0 was an entry-level effort covering five business-process scenarios, including timesheet reporting and routing vacation requests. Two years in, SAP has sold Duet to 250 enterprises and is readying Duet 1.5 for this June, said Thomas Grassl, SAP's director of solution marketing for Duet.

The feedback SAP hears most often is that end-user adoption increases significantly when customers are able to tap data from SAP systems through their Office applications, Grassl said. When customers had to leave applications like Outlook to check data like order statuses or financial forecasts, they skipped the extra step.

Customers are so loath to adopt additional applications that they'll stick with Office applications beyond their reasonable limits. CRM and accounting software sellers have long quipped that their biggest competitor is "Excel and handscribbled notes."

Prodiance Corp., San Ramon, Calif., develops software to help organizations inventory and audit spreadsheets. Even in the largest and most highly regulated organizations, Prodiance found end users shunning fancy ERP systems in favor of simpler tools, said Eric Perry, vice president of marketing.

"There seems to be a pervasive problem in the market where companies are using Access and Excel for critical business processes like financial reporting," Perry said. "What we found is that when they pull the books, they pull data out of ERP systems, crunch the numbers in a spreadsheet, create their management reports and plug the data back into the ERP."

Prodiance, a Microsoft Gold partner, relies on Microsoft for both technical infrastructure and a sales push. It participates in Microsoft's managed partner program, which keeps it on the radar of Microsoft's field sales reps: "They have all the right relationships within the accounts we want to get to," Perry said. Client Profiles has had few problems eliciting from Microsoft the technical details it needs to build atop Office—always a risk for ISVs that tie their platforms closely to Microsoft's.

"Not to say there aren't challenges—Exchange is not real friendly to deal with," McIsaac said. "But we can usually dig down pretty deep, pretty quickly. Overall, the switch has been very good for us. It's helped really clearly establish the direction of the company—our next-generation technology, version 10, is all .Net."