Facing 'new world of work,' Microsoft locks up Office

REDMOND, Wash.--For most of their 20 years, Word and Excel documents have had free rein within corporate walls.

In the early days, workers used an array of floppy disks to shuttle documents created with the programs from department to department. E-mail let the files become even more far-flung, easily moving them among branch offices around the globe.

But with the advent of federal record-keeping regulations such as the Sarbanes-Oxley Act and the Health Insurance Portability and Accountability Act, which impose strict rules on how companies manage and archive information, those freewheeling days are nearly at an end.

That's a big deal to Microsoft, which wants to make sure that however the rules change, businesses are still using Excel (and Word and PowerPoint) for their computerized files.

"We know that we've got an opportunity to provide IT the types of controls that they need for this concept that we call the 'million dollar document,' which is one of those documents or spreadsheets that (contain) a million dollars or more worth of IP (intellectual property)," Chris Capossela, a corporate vice president in Microsoft's Information Worker unit, said during a meeting at a recent company-sponsored CEO summit here. "Those have got be something that IT could control. But we still want people using Excel to be able to build them."

With the next version of Office, Microsoft plans to let businesses set rules, enforced by server-based software, to determine how those documents are handled. The shift is just one of several trends the software giant is labeling part of a "new world of work" that its next generation Office software will address. But at the same time that Microsoft is saying it understands the shifting tides, it's trying to make sure it doesn't miss any undercurrents.

Along with its long-standing research efforts, the company has stepped up its efforts to look at how different people are working, across industries and geographic boundaries as well as in different age

groups. Last year, the company flew in about a dozen Gen Y-ers from across the globe to its headquarters here. At last week's CEO summit, Microsoft gathered to discuss its vision for the future of work with a more traditional crowd: a pair of chief executives, along with Tom Austin, a fellow at researcher Gartner.

During a meeting at the summit, Capossela made the case that Office, with its familiar interface, is the best way to handle even sensitive documents. It just needs to be updated to deal with new procedures for ensuring that documents are locked down when they need to be.

"It's got to be managed in a certain way," Capossela said. "You don't get to do whatever you want--you don't get to save it on your hard drive; you don't get to e-mail it around."

But one of the CEOs in the room, Bob Greifeld of the Nasdaq stock exchange, noted that it's hard to always know which documents need the extra-sensitive treatment. He pointed to a recent example where Nasdaq could have gotten in trouble with regulators because it had only the latest version of its financial models related to an acquisition.

"That's where an Excel (type program) is not ideal because of its unstructured nature," Greifeld said.

Capossela said things will change when Microsoft introduces Office 12, the next release of its productivity suite, in the second half of next year.

The company has not said exactly how it will lock down documents, but it has said that is a goal. Microsoft has been widely expected to introduce new server products in conjunction with Office 12.

Though the increased regulation poses some challenges to the way parts of Microsoft's Information Worker unit have been doing business, in other areas the company feels like it's getting a boost.

With instant messaging, for example, Microsoft is trying to take advantage of the fact that in many industries companies have had to stop using the technology because of regulatory concerns. In that area, Microsoft has introduced its Live Communication Server, which lets workers share information with company colleagues as well as send instant messages to outsiders using AOL, Yahoo and MSN instant messaging services. The key driver for companies, though, is that the server takes what had been a rogue technology and brings it under the purview of a company's IT department.

"IM--the reason it popped up, even though e-mail is there, is because it satisfied a certain user need in terms of a dynamic communication channel, kind of a sideband, a little walkie-talkie between the users,

and it satisfied their needs," said Lotus Notes founder Ray Ozzie, who joined Microsoft after it purchased his company, Groove Networks. "And then that centralized logging (found in Live Communication Server) satisfied the organization's needs."

But Greifeld said Microsoft has to deal with the fact that changing the rules can change the medium. Once you start logging instant messages, it's not the same tool it was.

"What happened is the dynamic of IM changed when people knew it was being logged," Greifeld said. But both Capossela and Greifeld said that the change is not necessarily a bad thing.

"For us, the value of instant messaging isn't the sideshow where people get to have private conversations," Capossela said. "The value of instant messaging is the ability to connect with somebody absolutely real-time and to have that quick burst back and forth."

Capossela pointed to IM today as "going through the normal growing pains" in the transition from social phenomenon to useful business tool. "It's not about instant messaging your friends. It's not about instant messaging people to have a conversation that is completely private. That's not going to be how those tools are used five years from now."

Rather, he said, the medium itself will shift, just as e-mail and Web browsing evolved once they became mainstream business tools.

Gartner's Austin tried to make the case that, despite the recent shift to increased regulation, the ultimate trend in technology will be toward the democratization of information with less central control. However, that idea was shot down by both Greifeld and Ozzie.

Ozzie said that if a technology is to be successful, it needs to meet both the needs of the individuals using the product as well as the company's overall goals. Many a company, he said, has deployed a sales force automation tool that it thought would have great benefits, only to find that no one used it because it was too difficult.

While its main purpose for the meeting at the CEO Summit was to get feedback on its "new world of work" idea, Microsoft may have also made a sale for its collaboration technology.

Greifeld indicated during the meeting that were Nasdaq to launch a new acquisition bid, it might want its partners to have tools like Microsoft's at their disposal. Later in the day, Greifeld said in an interview that he had "already made some phone calls on that."

"We are going to definitely look at it," he said, stressing that it might be a while before Nasdaq has another acquisition to deal with. The company already has plenty on its plate with its plans to buy the Instinet electronic stock exchange. "There are definitely no deals in the works. We are concentrated on making this one happen."