If the company is going to reinvent its enterprise business around one of its units, this is the one to pick, says Rick Sherlund, an analyst who covers Microsoft for Goldman Sachs.

But creating tools that allow CIOs to manage, configure and provision a suite of disparate applications is both a technical and strategic challenge. And no one, inside the company or out, can articulate exactly how Microsoft is going to get there.

Ballmer says that Microsoft has many of the tools in place but that they are "certainly not anywhere close to sufficient," adding that "no one product is this vision." However, he believes that Microsoft has the right combination of enterprise and Web experience to pull it off. Oracle and SAP, he argues, have a scope limited to their suite of products. IBM has reinvented itself around consulting services. No other company besides Microsoft, says Ballmer, combines as much enterprise and Web experience with a rich understanding of business process.

Analysts, however, say Microsoft’s competitive position may not be as strong as Ballmer describes. For starters, managing a customer’s computing resources is something that Microsoft has historically left up to partners. "They have to piece about moving toward managing services," says John Rymer, an analyst at Forrester Research. Microsoft knows how to help CIOs manage its own products, but incorporating other companies’ products is a substantial leap, Rymer says.

The biggest leap, without a doubt, is that Microsoft’s vision requires it to embrace a heterogeneous computing environment. Yet Microsoft executives, historically averse to working with anything they haven’t built themselves, seem united in their commitment to supporting non-Microsoft technology.

"We want to do it whether you’re developing [applications] or whether you’re consuming them, and whether we’re delivering them or whether someone else is [delivering] them for you," says Lees.

One factor could make Microsoft’s work supporting this plethora of applications easier: Software-as-a-service applications all have the same delivery mechanism—the Internet—which requires that they be built with a specific set of standards. These standards—XML, SOAP, WSDL and UDDI—are the same ones that Microsoft and IBM helped push through standards organizations like the W3C and Oasis at the beginning of the decade. (For the history of the standards process, see "The Battle for Web Services," at www.cio.com/100103.) Microsoft will have an easier time using these standard protocols to integrate with Web-based services than it would integrating with a more traditional client/server application that uses a proprietary standard, says Dwight Davis, an analyst with Ovum Summit.