TECH ED - Microsoft builds on managed services

Two years after creating a division that offers managed services, Microsoft has signed three more pilot customers and continues to expand its data-center investments to pave the way for more deployments.

In addition to its flagship customer, battery maker Energizer Holdings, Microsoft now is providing managed services for XL Capital in Bermuda as well as two other customers that do not wish to be named, said Ron Markezich, vice president of Microsoft managed services. He discussed the business in an interview on Monday at the TechEd 2007 conference in Orlando.

The company has received a lot of feedback from its initial deployment with Energizer and is using that information as it expands its offering to other customers, he said. Microsoft hosts and manages only its own software products for customers, though those products often run in heterogeneous IT systems.

Microsoft manages a deployment of Exchange Server, Sharepoint, Live Communications Server as well as runs a remote desktop service through its System Management Server product for 8,000 Energizer desktop users, Markezich said. The software runs in Microsoft's data center outside of Seattle, where Microsoft also runs the back end for its Windows Live services.

Microsoft entered managed services later than many of its competitors, such as IBM, Sun Microsystems and a diminishing group of independent managed services providers that have found it hard to compete with large vendors or have been acquired. However, Microsoft considers hosted services -- including both online consumer services and enterprise services such as its managed offerings -- as a top priority for the next several years.

Two years ago, Microsoft purchased e-mail managed services provider FrontBridge Technologies. The company recently opened a new data center in Quincy, Washington, a location chosen for its energy prices, Markezich said.

Cost is only one reason customers find managed services an attractive option, Markezich said. He declined to comment specifically on how much Microsoft charges for its services, since it is different depending on the customer. He also wouldn't say how much customers stand to save by having Microsoft manage IT assets rather than host and deploy them on premises. But he said there are other perks to going the managed services route.

Unlike many other providers of managed services, Microsoft does not charge customers for rolling out a software update, so customers can get the latest software from the company without having to purchase it and deploy it themselves.

"We don't say, to roll it out you have to pay us more," Markezich said. "It just comes as part of the standard service fee." Microsoft is currently deploying the newest version of its Office suite, Office 2007, at Energizer, he said.

Markezich said customers also like having Microsoft host and manage their software for them because it frees up IT employees and resources that can be used in another area of the business.