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Microsoft Teams joins growing business chat software market

The general release of Microsoft's latest product puts Slack square in its scope, with hopes of taking a chunk from the business chat market.

Unlike Windows or Office, Microsoft wasn't early to the table in the collaboration and business chat space, with...

formidable competitors like Slack and Google already assisting business customers with internal chat needs.

But Microsoft Teams, the Seattle-based company's latest product that was generally released this week, hopes to take a chunk out of the business chat software market by targeting Microsoft's deep pool of existing customers.

With its expansive reach into the business process already cemented with products like Office and Outlook, Microsoft is bundling Microsoft Teams with Office 365 licenses, allowing for native, integrated chat and collaborative workspace within Office 365 products.

"Teams is what Office 365 should have been in the first place," said Alan Lepofsky, vice president and principal analyst at Constellation Research Inc. "It's a unifying front end that brings together conversations and documents and messaging and voice and video and project management. Teams can be the new starting point."

Integration with Microsoft products

The biggest advantage Microsoft Teams has over competitors like Slack or HipChat is that Teams is integrated in several popular Microsoft business applications -- with integration with more products expected throughout 2017.

During a general release webinar for the business chat software, Microsoft showed off the close integrations with Word, Excel, SharePoint, Power BI and Calendar, among other apps. Users were able to drop working documents and spreadsheets directly into threaded conversations, which included separate tabs for Power BI analytics and Planner for easy access to campaign analytics and meeting scheduling. Users could also move quickly from a Teams conversation into a Skype call with multiple parties.

Teams is what Office 365 should have been in the first place.
Alan Lepofskyvice president and principal analyst, Constellation Research Inc.

The integration with Office and other Microsoft products may be Teams' biggest impediment in gaining more of the market that is genuinely curious about its functionality.

"Microsoft's greatest strength with Teams is also its greatest challenge," Lepofsky said. "With its integration with the Office 365 family, you get all those benefits and integrations, but it also comes at a cost. It's not as simple as going to the website, putting your domain name and you're up and running like you are with Slack."

Departments already invested in Office 365 can afford to poke around with Microsoft Teams, but smaller departments or organizations just getting into business chat software may find it challenging to give Teams a try with little investment.

"Its strong suit will be pacifying Microsoft customers," Lepofsky said. "I don't think it will sway the migration from a Slack or a HipChat."

'Slack is like a verb here'

If Microsoft does intend to take away existing Slack customers, it will be necessary to provide migration software to help ease the transition for those companies that do decide to switch -- whether it's for monetary or functionality reasons.

"I think it's going to be a challenge come renewal time for all third-party vendors to prove that they still provide incremental value," Lepofsky said. "Now, it's not just cost. You could have a company love Slack and Microsoft and pay for both, because switching over is not just flipping a switch. The next step for Microsoft is to show that not only can they compete, but they can help you migrate."

Still, it will be difficult to sway longstanding Slack customers -- many of whom have developed such devotion to the company that its name has become a verb.

"Slack is like a verb here, 'Slack me back,'" said Jonathan Wasserstrum, co-founder and CEO of New York-based real estate marketplace SquareFoot. Wasserstrum spoke about his company's use of Slack back in November, when Teams was initially announced. "If I went to my employees tomorrow about implementing cost-savings measure and removed Slack -- it's not worth the risk."

To better compete with Microsoft in the Enterprise space, Slack recently released its Enterprise Grid product, which is made to more easily scale out to businesses with at least 500 employees.

Dynamics integration, external access still needed

One area that Teams is currently lacking that removes some of the collaboration of its business chat software is the ability to allow external partners or colleagues to participate in a conversation. Say you're a marketing rep working on a campaign for a customer and they are participating in the formation of it. Under the current iteration of Teams, if the conversation was happening within the application, the external party wouldn't have access to it. Instead, communication would have to be done the old-fashioned way, whether it be via email, phone or face-to-face.

In response, a spokeswoman for Microsoft said that external guest access is expected at the end of Q2, adding that guest access is available in Yammer and Office 365 Groups.

And while the integration with Office 365 is extensive and integration with Outlook is expected "in the next few months," according to Kirk Koenigsbauer, corporate vice president of Office 365 client applications, executives were quiet on when customers can expect Teams to integrate with Dynamics, Microsoft's CRM offering.

"On launch day, Microsoft said we're competing with Slack and Google -- 'We have one of these, too,'" Lepofsky said. "They didn't compete with Salesforce yet. Next up is: Can they show full end-to-end business process in Teams?"

If Teams were to integrate with Dynamics, Lepofsky could see a scenario where reps from each part of the business process helps nurture a prospect through the collaboration of Teams, provided it integrated Dynamics' customer data into it.

Microsoft cozies up to third parties

With more than 150 third-party integrations, Microsoft Teams is finally embracing the vast ocean of plug-in apps and bots that can enhance the business chat software with more capabilities.

By doing so, Microsoft is appeasing both the one-suite-for-everything and different-tool-for-everything crowds, allowing for close integration with its popular business applications and the chance to find plug-ins to fit a company's unique needs.

"With Teams, you're going to have a series of integrated applications from Microsoft," Lepofsky said. "This is the new Microsoft, post- [former CEO Steve] Ballmer. Microsoft is completely open. They're okay with saying our email and office space use tools other than Microsoft tools."

Current Microsoft CEO Satya Nadella lauded the new product in a press release, calling Teams "a chat-based workspace designed to empower the art of teams."

To help with that empowerment, integrations with Teams include SAP, KAYAK, Workato, Trello and dozens more.

According to a Microsoft spokeswoman, Teams is included in most Office 365 commercial suites subscriptions and for nonprofit customers. The cost of an Office 365 Business subscription ranges from $5 per user per month to $20 per user per month. 

Next Steps

Slack or Microsoft Teams: Which is best for collaboration?

Slack Enterprise Grid needs more to beat Teams

Team messaging apps go mainstream

Dig Deeper on Cloud-SaaS online collaboration tools

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