Muglia also understands the role of Microsoft software in incurring customers' operational costs, as he says he was recently reminded in an open forum with large Microsoft customers:
One of the CIOs just said to me: 'Bob, you don't get it! We never want another software update from Microsoft again!' And I'm like, wow, that's kinda tough. And then he said, "Look, we want the features, but you put all the burden on us; you put all the operations cost on us; you make us do all the work. I want you to handle it. I don't want to take care of it.'
And that's really the key to software as a service and the cloud all around, is how we can provide the services to our customers. Then we can keep them up to date. We can keep the value associated with the new technology flowing into the IT organization, into the company, and thus generate the business value -- but then they don't have to pay all the cost and have the training and everything.
Microsoft has already achieved that happy end state with Exchange and SharePoint, which the company has made available by subscription as software-as-a-service offerings for two years. When you think about it, it doesn't matter so much where "services" like this live -- in a customer data center or on the servers maintained by Microsoft or one of its partners. What matters is that the overhead drops to the level yearned for by Muglia's CIO friend.
That's one of the guiding principles behind the forthcoming Windows Azure Appliance, Microsoft's development platform as a service (PaaS), packaged for easy deployment and maintenance across multiple servers. Microsoft partners such as Dell and HP will sell the hardware with the Azure platform preinstalled. Whether in a box or offered as a service over the Internet, it's all about driving down those operational costs:
The real fundamental idea with Windows Azure is that the application is what you focus on -- you don't focus on the infrastructure. With Windows Azure the application never thinks about a virtual machine. To me that's the definition of PaaS, by the way. With IaaS [infrastructure as a service] you're managing virtual machines, and there are advantages to managing virtual machines at scale. With PaaS you never see a virtual machine. You focus on the application. And with Windows Azure that's the design point we built. So the whole system, the infrastructure, is self-maintaining. All you worry about is how you write that application so it scales out and uses these underlying services.
And so when customers have looked at that and they've seen it in our public cloud environment, many customers said to us 'We love that but we want to run it in our data center.' Or hosters and systems integrators have said, 'This is a great model to enable applications to be built, but we want to provide it to our customers as well.' So that's why we're creating this Windows Azure Appliance, to essentially package what we've learned, the service that we run every day, and deliver it again as a service with hardware you acquire from one of our industry partners, one of our OEM partners, and run it in a customer or service provider data center.