With the completion of the acquisition of Parlano, producer of the MindAlign persistent group chat service, in early October, Microsoft’s Unified Communications Strategy has taken another leap forward.

“Until now, all we’ve had is a person-centric view,” says Shaun Pierce, general manager, Server Products, Unified Communications Group, Microsoft. “We already have instant messaging and a form of group chat, but they [Parlano] provide a completely different lens on the way to communicate, which instead of being person-to-person is topic-based.”

Originally the Parlano product was an in-house development made in 1995 by UBS Warburg. It was subsequently floated off as an independent entity in 2000, and attracted clients such as Royal Bank of Scotland, ABN AMRO, Standard Chartered and ANZ Bank. In addition, “we’ve seen a lot of demand, and likewise made a big push, into the buy side,” says Jeff Schultz, senior vice president worldwide marketing at Parlano. “Several hedge funds have recently acquired the product, and a lot of them are using it for internal reasons, as well as to talk to the big banks.”

UBS, meanwhile, remains a big user. “When I started working in chat for UBS about three years ago, we had 16,000 users,” says Munawarali Jaffer, head of chat and instant messaging with the firm. “Today we have over 35,000, so it’s a substantial growth. And that is still focused on the investment bank. Half the firm at least isn’t using the product yet, but they’re knocking on my door, asking when it will be available. Wealth management is certainly interested in the product, and that’s likely to be an area where we can broaden out use of the product in the next year or two.”

According to Jaffer, the main benefit of chat per se is that it is so instant: “We have many channels in the organization – some of which are only internal and some we share with our customers – that have almost real-time news flow and information, and very fast-paced discussion. You can’t get that on any other medium today.”

And it is not just speed, but the breadth of discussion on any area of common interest that is possible using chat. Indeed, in some of UBS’ channels there are 2,000 or 3,000 people interested in particular topics, says Jaffer. And the interactions are not only about developments in the foreign exchange market. “Sometimes it can be about what’s happening on the cricket field,” he notes. “So it’s not just business, we use it as a key part of our social fabric too.”

As for MindAlign in particular, one of its great advantages – something unique to the product – is its group persistent chat capability, says Jaffer. It is also flat in nature, meaning there is only one FX channel, one photography channel, one cricket channel, which matches UBS’ organizational structure well.

In addition, it features good security and filtering capabilities. In this way, traders who are interested in particular companies or instruments can set up filters that automatically monitor all channels for any news flow on that particular item and highlight it for them, Jaffer explains.

Parlano was therefore an attractive, and obvious, acquisition target for Microsoft. As Schultz points out, “the use of group chat within financial services has proven to be a mission-critical application, and MindAlign has proven to be a dominant player in that space.”

To date, the product’s main user base has been in capital markets areas, especially among sales traders and research organizations across fixed income, equities and foreign exchange. However, use is spreading into different parts of these organizations’ operations, according to Schultz. One reason, he says, is that firms have trading desks across multiple asset classes in more locations, and can get more value by having all those groups more aware on a real-time basis of what’s happening elsewhere, and “making it a persistent conversation so that it’s more follow the sun. So as the people in New York come in they see what’s gone on in the European markets and can get up to speed quickly.”

Another big trend is the one firm concept, where senior banking executives are striving to present a unified set of services and capabilities to their clients, rather than a collection of different groups, says Schultz. “For that to happen, you need more efficient and effective communication between the different businesses. It’s not just between the different desks, but for example between wealth management and capital markets.”

And that means tying the different parts of the banking organizations in with what is happening on the trading floor in a real-time environment. But that raised the prospect of much greater technical infrastructure integration “that we can now satisfy as part of Microsoft,” says Schultz.

At the same time, persistent group chat is a growing requirement outside financial services, says Schultz. “So it is entering that market phase where it’s becoming more of a horizontal play.” And here Microsoft’s much larger sales force can help drive the product out into that expanded market.

Strategically then, bringing Parlano into the Microsoft fold plugs a functionality gap in the software giant’s product suite as it strives to meet the burgeoning demand by organizations for enterprise-wide unified communications architectures. And that means seamlessly integrating persistent group chat with other types of communication, such as instant messaging, voice over IP, Web conferencing and video conferencing, says Schultz. “And from that perspective, both companies looked at it and said we could deliver more synergy and value to the customers working more closely together than as partners.”

So whereas MindAlign at present is essentially text-based communications, in the Unified Communications Group “we pride ourselves on taking on all aspects of communications, whether it’s text or voice or video or telephony,” says Microsoft’s Pierce. The initial plan then will be to merge MindAlign’s group chat functionality in with Office Communications Server and Office Communicator.

“But more specifically, try to enable different modes of communication beyond just text,” Pierce explains. “So if they have a room-based communication metaphor right now, we should be able to extend that to not just text, but have break out rooms for e-learning where you can do voice or video or document collaboration in a room, and have it be persistent there going forwards so people can make reference to it. Almost like a recording of meetings or communication.”

And behind the scenes Microsoft wants to better integrate that capability with SharePoint, to enable users to search through past content that spans different modes of communication, says Pierce. “So you could take voice or audio conferences and get them transcribed at the back end. And now [that content] is searchable text in multiple languages.”

Being able to host a chat channel within a SharePoint site, and run virtual meetings with an integrated flow of documents and presentations, as well as the voice, video and chat capability, is going to be great, reckons UBS’ Jaffer. “But I think it’s going to be a little while before the business benefits become clear,” he adds.

One area in which Jaffer hopes Microsoft does maintain momentum is mobile chat. The next project he was planning was to try chat on BlackBerry, where he says there is a lot of interest. “So I hope Microsoft is going to maintain a good capability on BlackBerry, as well as other mobile platforms.”

Jaffer’s biggest request though is to improve the migration path between product versions, which, he says, would be a huge benefit for customers: “You have to migrate users from the front end, get them used to a new application, worry about what preferences they’ve got set, move individual channels that they have over to the new infrastructure. It’s quite an involved and painful process.”

As for Richard Edwards, senior research analyst with Butler Group, he believes the Parlano acquisition fits nicely into Microsoft’s unified communications strategy. However, he still sees gaps that need filling in Microsoft’s collaboration infrastructure, particularly in the area of document collaboration, where he would like to see it come up with more innovative solutions for the enterprise space. “There are one or two vendors that are close allies of Microsoft that have some compelling propositions,” he says, “particularly for collaboration between organizations on contracts and various other types of documents.”

One that comes to mind, says Edwards, is NextPage, “which is a new thing in the legal market in particular, but also in some financial services companies. Maybe that could be one of the missing links.”

And according to Edwards, Microsoft needs to think more laterally, and reinvigorate some of the products in its portfolio: “It needs to put [Microsoft Office] Groove to far better use than it has done to date. It needs to look at what it’s doing with OneNote and Word, and Excel and PowerPoint, and bring those up-to-date in order not only to provide the functionality and capability that we’re increasingly looking for in the collaboration space, but also to head off some of the things Google is doing. For example, Google can mix simultaneous editing of a document using its Google Apps, whereas you still can’t do that with Microsoft Word documents. So my message to Microsoft is about seeing more innovation and better use of the technologies it already has, and moving away from just another version of Word.”

www.parlano.com

By Paul Allen