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SharePoint Take Lead in Collaboration Market! Are You Getting in This Game?

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Microsoft Embeds Sleeper in Business Software

By ROBERT A. GUTH
April 24, 2007; Page B1

When the Miami-Dade County Public Schools set out to build a way for its teachers, students and parents to collaborate online, it was surprised to discover it already had Microsoft Corp. software that could help do the job.

Included with software the school district had previously bought was something called SharePoint Services, which Miami-Dade used as the first step in creating a system for planning school programs and classes, posting notices, and handling other tasks that require its teachers and students to collaborate.

"We kind of unintentionally fell into it," says Deborah Karcher, executive officer at Miami-Dade's information-technology group. The school system considered an alternative from International Business Machines Corp., but with the Microsoft software already in place, "it just seemed like a very low risk."

COLLABORATION SOFTWARE

The Situation: Over the past few years, Microsoft has quietly established itself in the emerging market for collaboration software with a product called SharePoint.

Why It Matters: Collaboration software -- which allows workers to share and work together -- is a new strategic foothold for technology makers trying to gain a broader hold on corporate customers.

What's Next: Expect a fierce fight among technology giants -- Microsoft, Oracle, IBM, Adobe and others -- as each tries to become the central player in collaboration.

What Miami-Dade wanted to do is part of a broad trend in how corporations and institutions are beginning to use their computers. Historically, using most PC programs has been a solitary thing -- workers used ad hoc methods to work together, say by emailing a spreadsheet among different team members, one by one. Now a host of new "collaboration" software is letting them use corporate networks to more easily work on the same documents at the same time and accomplish any number of tasks that groups or teams do together. Workers using collaboration software, for instance, could have a particular document like a spreadsheet on their respective screens simultaneously, with all having access to the material while talking to one another over a videoconference.

To do that, companies need to install a mix of software running behind the scenes that ties together PCs, databases, email systems and other programs businesses use. Many businesses, to their surprise, are finding that Microsoft anticipated that demand and has already sold them SharePoint before they even knew they needed it.

SharePoint is now Microsoft's contender in an emerging battle over collaboration software with companies from a cross section of the technology industry including Oracle Corp., Adobe Systems Inc., IBM, EMC Corp., Cisco Systems Inc., Google Inc. and lesser-known players such as Zimbra Inc., Alfresco Software Inc., the Plone Foundation and Socialtext Inc. Each company has its own approach to collaborative software market, but "all want to be central to it," says Peter O'Kelly, an analyst at researcher Burton Group.

For Microsoft, SharePoint is a critical engine to increase sales of a broad array of its other software. In 2003 the company made a basic form of SharePoint available as a free download with Windows Server, a version of Windows for the large corporate computers of customers like Miami-Dade schools. The hope was that the customers would seek -- and pay for -- a newer version of the program with more collaboration features and would then go on to buy other Microsoft software.

To date, largely unheralded, Microsoft has sold 85 million licenses to the enhanced version of SharePoint across 17,000 companies. No marketing campaigns are in the works. "When we get SharePoint in there, it sells itself," says Jeff Teper, vice president of Microsoft's SharePoint Server group.

The free version of SharePoint is a separate download because including extra software with versions of Windows is a touchy subject with regulators. Bundling got Microsoft into trouble when it used Windows to boost its Web browser and crush rival browser maker Netscape, which prompted the company's landmark antitrust battle with the U.S. government. In the case of SharePoint, Windows Server customers have to make the decision to buy SharePoint Server, which is the full-blown collaboration software. The government has routinely monitored Microsoft's compliance with the antitrust settlement, while Microsoft has internal controls to keep its products within bounds of the settlement.

Hawaiian Airlines wants to add collaboration features to its Web site to allow, say, frequent-flier customers to share travel tips and stories, says David Osborne, chief information officer at the airline. Already standardized on Microsoft products, the airline decided to license the enhanced SharePoint software, which it has been using since last month. "It wasn't particularly difficult," Mr. Osborne says. "The thing was already part of your infrastructure."

Salespeople at American Bible Society use SharePoint from the field when they sell Bibles, take donations or sell financial instruments. If a salesperson sells a retirement package, he or she can use SharePoint to securely enter customer information that then can be accessed by American Bible Society workers who process the order. Outside partners such as financial institutions can also securely access the data, says Nick Garbidakis, chief information officer at American Bible Society.

In the past, salespeople might use a fax and/or email to submit the information, methods that were insecure and slow, says Mr. Garbidakis. "It would take days or weeks to exchange the data," he says. The society upgraded to the enhanced version of SharePoint and is now rolling it out more broadly in the organization, he said.

Microsoft's rivals, too, are profiting from collaboration software of their own. IBM's Notes software is the pioneer product in the collaboration market and despite years of losing market share, is now resurgent as IBM rolls out related products, including new software for sharing content called Quickr, that help it compete better with SharePoint, says Mr. O'Kelly, the Burton Group analyst.

Oracle, meanwhile, has built collaboration products around its core database products, most recently rolling out WebCenter Suite, a SharePoint competitor.

The collaboration battle could have long-term strategic benefits for the companies. Once a given software maker's collaboration programs are in place, a company using them will start filling them with valuable company data, from documents to videos.

After all that company data is in the system, it's hard to move to a competing system, say some industry executives, who compare the emerging collaboration battle to an earlier era when Oracle became the market leader in databases after a mass of companies committed their information to Oracle databases. Once companies were on an Oracle database it became easier for the software maker to sell upgrades and other software -- and harder for competitors to woo away the customer.

"Owning the data is owning the customer in perpetuity," says Matt Asay, vice president at Alfresco, which makes software for managing content.

"Our vision, much like Office, was to build an integrated set of compatibility that is relative low cost and easy to use," says Microsoft's Mr. Teper.

The catch: To squeeze all of the functionality out of SharePoint, Microsoft customers need to buy extra software from the company if they don't already have it. For instance, features in the latest version of SharePoint will work only with Microsoft's Office 2007, the newest version of the business software suite. That could be a beneficial connection for Office, as Microsoft struggles to convince some business to upgrade to Office 2007 when their current Office setup works fine.

SharePoint is also starting to lift weaker Microsoft products. Alan Kahn, chief executive of InterDyn AKA, a company that resells Microsoft products, says that SharePoint is helping to spur sales of Microsoft Dynamics software, which has been a perennial laggard. That strategy extends to the range of already-strong Microsoft products that work with SharePoint, from its SQL Server database to corporate search technologies.

Within two months of rolling out the basic version of SharePoint last summer, Miami-Dade was surprised to find over 50,000 students accessed the system, prompting the school system to upgrade to the enhanced version of SharePoint. Those licenses, combined with security software and other Microsoft software and services cost it an additional $2.2 million, says Ms. Karcher, the executive officer.

Uses of SharePoint contemplated by Miami-Dade teachers include sharing research materials, posting and discussing assignments, and creating a homework "drop-off" box for students to submit their assignments.

Yesterday, Miami-Dade opened the system to 30,000 school administrators. By the end of this summer, Ms. Karcher says, SharePoint will be available to one million students and their families, teachers and employees in the school district.

Write to Robert A. Guth at rob.guth@wsj.com