The Bloor Perspective: Microsoft's shrewd vision, outsourcing lessons and the mouse

Microsoft CEO Steve Ballmer provided the keynote speech at the Detroit Economic Club recently, providing his view of the future to the 800-strong audience. While there wasn't any shocking new initiative announcement, Ballmer did confirm what many already know. Microsoft is looking at the world through a different set of lenses these days and, for once, it may be ahead of the game.

The basic message he was delivering was that everything will continue to get smaller and faster and so the devices that we use will become more portable and more useful.

The vision that comes from this is one of a mobile world linked by wireless connections. We each carry our own computing environment around with us (the mobile phone companies are already onto this one) and we mix business and personal information so we no longer have to separate business and home lives.

The idea of us all walking around with personal communicators that have access to business applications may seem a bit 'Trekkie' but it is the way forward. We already have all sorts of individual capabilities for collaboration, application sharing, and otherwise organising our lives but they do not all work together. Those that already work in a mobile environment spend too much time synchronising or using laptops that are too big and bulky to carry about.

Microsoft is getting there. It has the tablet PC - bulky though it may be at the moment - and it has the .Net software architecture for delivering applications in a distributed manner. We know that Microsoft is spending billions to pull together security and other infrastructure elements and that more is planned for the future. More time and more effort and we will see Steve Ballmer's vision come true.

*Getting out of outsourcing*

Mega-outsourcing deals make a balance sheet look good and are received positively by shareholders. They show the business is taking action and has shifted some of its assets. But whether such deals pass the test of time has yet to be seen. As the economy recovers, organisations will want to be fleet of foot and may find themselves entrenched in a quagmire of contract clauses and restrictions.

A Bank of Scotland deal was struck in 2000 and at a cost of £700m, it was predicted cost savings would be £150m over the course of 10 years. In 2001, the bank announced its merger with the Halifax mortgage bank to form Halifax Bank of Scotland (HBOS) and then in 2002 the outsourcing deal was cancelled, along with another one with Xansa.

The reason for the cancellation was that requirements had changed following a strategic review of IT needs and HBOS assured the market that this would not affect the three year, £690m cost savings plan it had promised shareholders.

IBM attempted to counter the termination with a managed services insourcing deal but HBOS stood firm as it gave 12 months notice. It will be a busy time for both companies over the next year as they attempt to unpick the contract. The success of the transfer of services back in house will depend on the exit clauses in the agreement.

Exit clauses are rarely given the attention they deserve in the negotiation process - the customer is keen to outsource and the vendor is keen to book the revenue; it's all part of the honeymoon period before the going gets tough once the contract starts in earnest.

A well-defined outsourcing agreement will provide as much flexibility as can be allowed within the commercial and resourcing constraints of the deal. Just think of it as a transition in reverse and consider staff, hardware and software (including licences), intellectual property and real estate.

Then there are the financial aspects - many outsourcing contracts amortise costs over the duration of the contract and so aside from a termination penalty these costs will all be brought up front.

It's more than likely that coverage of this deal will disappear into the sunset, which is a shame as the lessons learnt here would be useful to many others who should have looked before they leapt.

*Mouse traps*

Let's consider the mouse. It was an invention of Xerox PARC, which was popularised first by Apple and then later taken up by the whole PC industry with great enthusiasm - so much so that eventually it produced many species of mouse. One button, two button, three button, mouse with wheel, the radio mouse, the ergonomic mouse and all the variants that the human mind was capable of dreaming up.

Nobody pointed out the immediate and obvious problem. The PC had an input device - the keyboard - which required the use of both hands and then suddenly a new input device was added to the machine, which requires a further hand. The user needs three hands.

Now let us first consider the positive sides. There are applications that simply cannot work well or perhaps at all, without the use of a mouse. These applications are primarily those where a user is working on something in two-dimensional space (or even 3D space). We are talking CAD, desktop publishing, painting, drawing and even the browser. For these applications a mouse is a necessity.

However, as soon as the mouse appeared all software was rewritten to accommodate the new 'wow' factor, so that the next release of the word processor, spreadsheet, database program or whatever included the mouse.

None of this made any sense in terms of productivity. In reality it slowed users down because of their inconsiderate inability to grow another hand. The user was thus obliged to change context whenever he or she decided it was time to get 'mousey'. And in most instances the mouse was doing nothing than couldn't be achieved faster from the keyboard.

Only a few studies were done of mouse usage for such applications and they reached the obvious conclusion that the mouse was 'productivity negative'. But nobody cared and such studies were not given much attention. Who cares about productivity when you have 'wow'? What the mouse gave with one hand, it took away with the other.

The upshot was further confusion in the way users use the PC because the mouse often provides an alternative way of doing the same thing. In reality this meant more for the user to learn in order run an application.

** Bloor Research is a leading independent analyst organisation in Europe. You can find out more at http://www.bloor-research.com or by emailing mail@bloor-research.com