After 3 years in beta, Microsoft is expected to launch System Center Service Manager (SCSM) sometime this year. Long-time Microsoft watchers will know that the company often “drip feeds” new markets with product information before products are ready as a way of generating interest. This has the added benefit, from Microsoft’s perspective, of creating uncertainty and potentially delaying buying decisions for competing products. But a 3-year beta is unusual even for Microsoft, and is largely explained by the company deciding that the product needed a ground-up rewrite after feedback from early tests to improve performance and integration.
Although an official release date has not been published, organisations are already starting to reflect upon the consequences of Microsoft entering a sector which is currently served by relatively small-sized, niche software companies. Whilst BMC Remedy and HP Service Manager compete for very large installations, there isn’t really a stand-out market leader in the general Service Management software market, but rather a small group of vendors offering specific, focused products.
Microsoft expects, and frankly needs to compete across the breadth of any market it enters. And here, Microsoft’s standard approach is at odds with what most buyers have come to expect. Microsoft’s competitors in the Service Management software market most commonly use a sales model where they sell directly to the customer and provide related services such as installation, configuration assistance, customisation and training as well as the software. Microsoft has never used this model. Instead, it invests heavily in product marketing but sells through its partner network – which in the UK amounts to tens of thousands of IT service companies and resellers of all shapes and sizes, which in turn get their product from a distributor.
In choosing new Service Management software, companies frequently go through a tender process to ensure that they choose the most suitable product at the best price. But here, Microsoft is at an immediate disadvantage. A customer who wants to include Microsoft’s product in its tender will have to find a suitable partner to deal with, and may find there are multiple Microsoft partners who want to compete for the sale. And whereas niche vendors can genuinely offer an end-to-end solution including after-sale support which plugs directly into the software vendor, anyone considering Microsoft’s offering will be wary of the fact that they will potentially have multiple layers of support to deal with if they want answers or fixes to problems.
Of course, Microsoft can afford to compete on price as they do in other markets. But the software cost in changing Service Management products is only one part of the overall cost of transition. And whilst Microsoft is likely to tout its close integration with other System Center products as a key selling point, it has the major disadvantage in the UK market in that the product does not align with the Information Technology Infrastructure Library (ITIL), but rather the Microsoft Operational Framework (MOF). This in itself would be enough to see the product discounted in many tender processes. In a blog entry, a Microsoft employee points to ITIL licensing costs as the main reasons for the lack of ITIL alignment, which is rather curious for a company of Microsoft’s resources.
All things considered, can Microsoft convince potential customers that the multi-tier sales and service model is better, and will it win the market by selling cheaper? It is hard to believe the Service Management savvies will be easily convinced – Service Management software is a big investment not only cost-wise but especially because it is the heart of the support process, which it orchestrates. In such a peculiar market, where quality, reliability and ease of adoption are more important than price, Microsoft will have to work hard to win any form of trust, let alone take control of the market.
Adrian Polley, CEO