Office upgrade hard to justify, warns analyst

She advises careful benefit, cost analysis of "forklift migration." Move to Vista, however, can be staggered.

Only companies that are signed up to Microsoft's Software Assurance plan are likely to adopt Office 2007 in the near future because IT managers find it extremely hard to justify an Office upgrade to their board, according to analyst group Gartner.

Speaking at the Midsize Enterprise Summit in Paris on Wednesday, Gartner analyst Annette Jump said research done by the group showed that only about 2 percent of companies that weren't signed up for had adopted for the previous version of the productivity suite--Office 2003.

The software assurance plan ties companies into automatic upgrades of new Microsoft software at a discounted rate. The plan was updated late last year after coming under fire for allegedly locking users into buying unnecessary Windows upgrades.

"Very few companies will be able to justify buying Office at full price, which shows the importance of SA to Microsoft. Only 2 percent of companies surveyed last year who were using Office 2003 weren't on SA," Jump said.

Companies should quantify carefully how moving to the next version of Office will benefit their users, Jump said. Unlike the move to Windows Vista, which the analyst claims can be staggered--supporting two or more versions of Office is prohibitively costly.

"We believe that many companies will have to do a forklift migration with Office 2007, as supporting two versions of Office is very complex and will be too complicated for most," Jump said.

Office 2007 will include several new features, including an all-new user interface and new XML-based file formats.

Microsoft will offer new editions for the workplace. In the Professional Plus version, Word, Excel, PowerPoint and Outlook are augmented with the Access and Publisher products that come with the Professional edition, the Office Communicator instant-messaging program, InfoPath form creation software, and server-based content management and forms management capabilities.

There will also be an Enterprise version, which adds Groove, the collaboration program developed by Ray Ozzie that Microsoft acquired last year. Users who get the Groove desktop software have the choice of running their own Groove server or subscribing to a hosted service.

Jump added that few companies will be in a rush to deploy Office 2007 immediately, as many have only recently installed Office 2003. Although Office 2007 will run on Windows XP, most companies will probably look to have Vista installed before migrating to it.

"Office 2007 will only catch 10 percent of Microsoft's installed base by the middle of 2008, as only a small percentage will have moved to Vista by that point," Jump added.

And depite Microsoft's claims that Office 2007 will have improved graphical interfaces, the costs of supporting the suite through a help desk will actually increase in the short term as users become acquainted with new features, according to Gartner.

"They are trying to make it much more user-exposed, and the menu will change depending on what activity you do," Jump explained. "In the first few months, the cost of help desk support will go up despite the fact that Microsoft says the graphical interface will help drive down calls."

Companies that have a conservative approach to technology and aren't planning to integrate Office 2007 into their core business process may even choose to skip the release altogether or deploy it much later, Jump said.

However, she added, all companies will be required to deploy converters to ensure that their users are able to interact with early adopters of Office 2007. "All of you will have to deploy converters later this year or early 2007," she told her audience of IT professionals.

Andrew Donoghue of ZDNet UK reported from London.

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