Microsoft’s Software plus Service: The Missing Component

Microsoft laid out its web-based strategy at their recent annual meeting with financial analysts. Pressed by first of all Google, but even smaller players like Zoho and ThinkFree, Microsoft announced they will add similar services to their Office products, first of all Word and Excel.

We’re not moving toward a world of thin computing,” said CEO Steve Ballmer, referring to systems in which simple processing takes place on a PC, but more complex processing is moved to a centralized computer through a network connection. “We’re moving toward a world of software plus services.”

A few days later Microsoft’s half-hearted announcement (leak?) about giving away free, ad-supported versions of its baby-office, MS Works 9 sparked speculation if this would in fact turn out to be a Software plus Service offering.

Let me reveal a secret: I’ve been using Microsoft’s “software plus services” for years – long before the term was coined. Microsoft Money, the product I was forced to switch to when my bank abandoned Quicken support 7 years ago is a classic example of software plus services. The client software came with a browser-like UI, smoothly connecting online services into the basics ran on my PC. In fact switching between screens I often did not realize whether I was working offline or online. Isn’t that what “software plus services” is all about?

Money was a latecomer to the personal financial management scene, clearly dominated by Intuit’s Quicken, and in the first few years it got better and better … perhaps Microsoft’s intention was to kill Intuit after they could not buy it. When it didn’t happen, they must have lost interest – the annual Money upgrades brought less and less new features or even bug fixes, and smart users started to skip releases between upgrades. Then trouble started left and right: weird things happened to my accounts beyond my control. Categorization? I’ve long given up on it, most of my downloaded data is associated with junk categories. The real bad part: data changed in existing accounts, very old transactions downloaded again into already reconciled months..etc. This is my bank account, my money we’re talking about! The very data I meticulously took care of while in my possession now got randomly changed. The only way to be really sure I have the right balances was (is) to go and verify them at the individual bank or broker sites.

But none of this compares to the total ignorance Microsoft showed when they “upgraded” Online Banking on the 19th of July. There was no prior warning, or an option to upgrade at a later time when I logged on, I was simply notified that an upgrade *had taken place*, and that I no longer have access to my online accounts until I do a bunch of house-cleaning:

In order to update successfully, you will need to disable the existing online services for some of your accounts, set up those accounts again so that they will use the updated service, and then merge the old and new accounts.

Of course it’s not that simple, first I had to process all pending downloaded transactions, then back-up Money, then proceed with the task above. Oh, and the poison pill: merging accounts. I had the misfortune of doing it at a previous Money upgrade, and merge it didn’t… I ended up with zillions of duplicate entries to be cleaned manually. But I had no choice… I wanted to make a payment, and Microsoft locked me out of my accounts – so I started laboring away, around midnight. This time (unlike many) I was actually lucky: after about two hours, I was all set, the merges worked this time, and I was ready to make the payment – the 2-minute transaction I started 2 hours earlier.

(Update: Telling quote from a Microsoft employee:

This past weekend I got the most horrible and scary warning from Money. Just reading the instructions on how to keep using Money with Online Banking is enough to make this computer professional run screaming from my office. The instructions are 24 freaking pages!!! longer than the manual for the product. I seriously almost went to the “Add / Remove Programs” Control Panel to fix the problem.)

Now, if you’re a regular reader, you’ve probably noticed my anti-Microsoft leaning, and I don’t deny it: we all (well except Mac users) share the frustration of failed updates, the pleasure of patching the patches after Black Tuesdays – what is there to like? But none of that is comparable to a software company ignorantly cutting off their users’ access to their own money, (and I don’t mean *MS Money*smile_omg) and not even feel the need to apologize. It’s the absolute Cardinal Sin. And now this company wants me to put my trust in their services?

I’d much rather trust Wesabe with my money matters – their user groups are lively, full of advice, the CEO himself participates, in fact he is taking user calls 7 days a week. The full truth is, I have not switched yet, as they lack in functionality vs. Money, but I can’t wait….

Back to the title of this post – what’s the component Microsoft does not have to offer Software plus Service? It’s Customer Focus. It’s simply not in their DNA. It will be hard to deliver *Service* when your customers don’t trust you.

Update#2: Omar Shahine, a Microsoft employee responded – it’s worth reading in full, in fact I’ve just suscribed to his blog. I’m just quoting a few excerpts:

I absolutely empathize with this post on Software + Services by Zoli. As a long time user of Microsoft Money, I am this close to outsourcing the software part to Wesabe…

Now, I don’t agree that Microsoft lacks Customer Focus. That’s saying that all 70,000 employees lack customer focus…

I certainly don’t mean to imply that all 70,000 employees lack customer focus. They may all have the best intentions, it’s the end result that counts, the company’s interaction (or lack of) with Customers, and that’s often through products.
Money issue aside, I think it we add up the time spent with bungled patches, rebuilding Outlook profiles..etc, we (computer users) ALL lost days of our lives to Microsoft.
That’s bad enough, but can mostly be attributed to unintentional technical glitches. The Money Online Update was “Crossing the Rubicon”: Somebody in Microsoft had to make a deliberate decision that it was OK to cut off customers access to their financials without first telling them, giving them options, or even apologizing after the fact. That makes the *company* blatantly ignorant – despite the best intentions of those 70K employees.smile_sad

Update #3
: Further evidence of Customer Focus, the Wesabe way. I suppose they did not intend to pile on, but their comments got held for moderation, so they did not see each other’s.

And in perfect timing, here’s an article on Customer service 2.0, the Zoho way. The two stories they link to are worth reading – somewhat similar to what I’ve talked about here. Beliefs are important – but in our materialistic world, there is always the “What’s in it for them?” question. Well, it *pays* to focus on your customers. It may well be Zoho’s key differentiator, why users stick with them, instead of the default Goo-rilla. smile_tongue
It certainly paid another company, Atlassian which grew to over $20M in revenue without a sales force. “Support is Sales for us” – they claim (PDF), and the numbers back them up.

Update (8/8): Wow, interesting timing: Today Microsoft released Microsoft Money Plus, the 2008 version of the Money products. It comes in four editions: editions: Essentials, Deluxe, Premium, and Home & Business. Well, almost. Microsoft offers a nice comparison chart, which neglects to mention a small detail, available only at the footnotes:

* Important note – Microsoft Money Essentials will not be able to open previous Money or Quicken files. If you are upgrading from a previous version of Money or Quicken, Money Plus Deluxe may be the right solution for you.

Not opening Quicken … well, it’s their decision. But not opening data from their very own previous releases? And this is hidden in the small print?

I rest my case.

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  1. If you like wesabe, you should sign up at I got a private beta invite from a friend last week. From what I have seen so far, it looks pretty cool. I like that they try to ‘tag’ your transactions for you.

  2. Hi Zoli,

    Good posting!

    I have been reading about the online backup industry for a while now. Online backup is maturing and slowly getting the attention of the general consumer.

    One website worth mentioning is the backup review site:

    This very informative site, not only posts up to date news and articles from the industry, but also lists about 400 online backup companies and ranks the top 25 on a monthly basis and features a CEO Spotlight page, where senior management people from the industry are interviewed.

    May be you could review this site so that your readers will be aware of its services.

    I enjoy reading your posts. Keep it up!

  3. Kenny Sagar says

    I’ve been using (currently in private beta) for my finances and it’s pretty darn good! It automatically categorizes most of my data and they have a slick way to see where I am spending my money. It’s still a beta product but I like what they have so far and it is definately helping me out. Drop me a line for an invite (last i checked i have a few left).

  4. Zoli,

    Hi, I’m Jason Knight CEO of Wesabe. It sounds like you haven’t joined because we are missing some features that you need. Please let me know what those features are, so we can add them. When we launched Wesabe we tried to include only those features that we knew our users needed, so that we could build out the product based on customer feedback. you can reach me here:

    I look forward to hearing from you.

  5. Hi, Zoli,

    Thanks much for the kind words about Wesabe. What functionality are we missing that you need? We try to be very responsive to user requests, and we’ll add anything needed as quickly as possible.

    Thanks much!

    Marc Hedlund, Wesabe

  6. Well, I have hope that the Wesabe folks will be on track to make a product competitive with Money/Quicken.

    I too had to use that dreader “merge” feature once. What a disaster.

    Thanks for the comment on my blog btw :-).

  7. I encountered that same Microsoft update instructions page this morning was simply stunned. Reading stuff like “on a separate piece of paper, make a list of all of the accounts that lack the password text box” was unbelievable. I’ve been using Money for 8 years and only 6 months ago began exploring the automatic updates. Getting this notice really shook me.

    I’m on the fence about Wesabe too. It looks great and Jason’s a nice guy (I’m sure Marc is too, I just haven’t conversed with him yet). But, I still can’t quite get over my fear of entering account credentials there (and this is coming from somebody who built a site where people share their net worth details, but the catch is I never ask for account information). Maybe someday I’ll take the plunge.

  8. Hi Zoli

    Thanks for an informative article. It is good to see someone keeping at the big guys to stay focused on actual customer needs.

    Just wanted to point to the fact that Intuit Quicken Starter Edition doesn’t allow import of existing data either for some odd reason. I guess they’re afraid of people downgrading or something


  9. My one cent … in my humble opinion, I’d say judging Microsoft Software+Service strategy based on the use of Money is not necessarily accurate… I’ve seen a presentation about it and, even though they are truly missing some components, their strategy (from a corporate perspective) seems way more interesting than what IBM or even Google have to say about SaaS…

  10. I just want to say thanks for poviding such type of selective information. You can get amazing Analyst Resume in


  1. […] + Services and Microsoft Money I absolutely empathize with this post on Software + Services by Zoli. As a long time user of Microsoft Money, I am this close to outsourcing the software part […]

  2. […] new accounts with the new online settings, and then merge the old accounts with the new ones.  Some people have been very frustrated with it.  Some report it taking up to 4 hours, which I don't […]

  3. […] Microsoft’s Software plus Service: The Missing Component […]

  4. […] I could often not realize whether I was working offline or online – I actually think this was the precursor to Microsoft’s Software plus Services concept.  At its heyday Money effectively took over all one’s financial management tasks: it […]

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