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SharePoint Tries to Keep Up

Why any new collaboration tool will run up against competition from Microsoft.
March 28, 2011

The collaboration tools discussed this month in Business Impact all have one thing in common. One way or another, they will run up against the market leader: Microsoft’s SharePoint software, which is used by more than 100 million people around the world.

Market leader: Microsoft’s SharePoint software gives employees multiple ways of exchanging information.

SharePoint’s success can be attributed to several factors. One, it does a lot: among other things, it lets employees share documents, search internal files, coördinate tasks, and send each other instant messages through a central portal. Second, customers like the fact that it works well with other widely used Microsoft products, such as Exchange e-mail and the Office software package. Third, Microsoft offers a basic version of SharePoint free to companies that run servers with Windows software. 

SharePoint is also customizable—according to a 2010 study by the Association for Information and Image Management, 28 percent of SharePoint users add third-party applications to it. Cognizant, an IT consulting company whose 100,000 employees exchange information and blog about their work through SharePoint, built its own version of Twitter, called Cweet, to work with the Microsoft platform. Cognizant’s chief information officer, Sukumar Rajagopal, says the staffers who blog perform better on average and are more engaged with the company. All these blogs and “cweets” become part of the company’s searchable knowledge database, accessible by anyone looking for information. Rajagopal argues that such tools “can be used to build collaboration across layers much more effectively than you currently are able to with traditional communication techniques.”

It’s difficult to imagine another maker of collaboration software replicating all SharePoint’s services. Instead, software from many startups is designed to work alongside SharePoint rather than replace it altogether. But competitors still have a big opportunity in collaborative software that is hosted remotely, “in the cloud.” Offering such services could give them an important advantage, because one of SharePoint’s major flaws is that it doesn’t store data efficiently, argues Mark R. Gilbert, a research vice president at Gartner. That can make the user experience sluggish. A company can be forced to undertake significant IT work or buy extra servers and memory to make sure the program runs smoothly.

“If you don’t have a good-sized IT shop, taking full advantage of a SharePoint server license can be difficult,” adds Forrester Research analyst Rob Koplowitz. As a result, he says, “smaller organizations that have the luxury of starting with a blank slate are turning to the cloud.” Microsoft’s closest rival, IBM, already has a cloud offering with LotusLive Notes, and three million companies are using online applications offered by Google.

Microsoft recognizes this threat and has begun offering a remotely hosted version of SharePoint. Royal Dutch Shell plans to start using it in April so its employees can collaborate on documents worldwide. Later this year, Microsoft will launch an online package of products that has a version of SharePoint built into it.

“The cloud is picking up steam and will explode this year,” says Jared Spataro, Microsoft’s director of product management for SharePoint. Overall, he adds, Microsoft isn’t complacent about its market position. “A hundred million licensees feels like a lot,” he says, “until you realize that’s only one out of every five information workers in the world.”

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