Office Productivity Alternatives: Low Adoption Numbers Don’t Tell The Full Story

My colleague Phil Karcher completed some nice research into the state of Microsoft Office alternatives recently. I'll share a couple of the highlights here.

Competitors to Microsoft Office receive plenty of attention in the blogosphere these days. Whether it’s Google announcing a new mobile or social feature in Docs, Zoho a new API partner, or the recent buzz around the future of Open Office without Oracle -- it’s natural to wonder how much traction these applications are getting with corporate IT.
 
Open Office has a global presence, although predominantly in government and education. Google Apps for Business has a growing list of customers, although many are using Gmail, not Docs. Overall, alternatives’ take of the office productivity pie — particularly in large enterprises — is still very small.

 Yet, we hear from many organizations considering or piloting them. In fact over a third of respondents to our March survey of IT decision-makers with influence over the productivity tool kit claim to be “actively looking at” or “piloting” alternatives. So why does adoption remain so paltry?

  • Web-based alternatives get the lion's share of interest. Many try, far fewer buy. Despite interest (44% are "somewhat interested" in Web-based tools), a quarter of IT pros tell us they're actively looking or piloting, and a paltry 3% claim they've implemented web-based alternatives. Those same IT buyers are concerned with numerous obstacles to broader deployment, particularly user acceptance and compatibility with Microsoft Office file formats.
  • Alternatives are true replacements for only small segments of the workforce. Of the respondents to our survey who have deployed an office productivity alternative at their company, every one also supports some version of Microsoft Office — reinforcing the view that alternatives actually serve as replacements for specific segments of the workforce (e.g., browser-based alternatives for users with basic needs, WordPerfect for legal pros). For other segments, they're complementary tools used to enrich older versions of Microsoft Office with collaboration features. The alternatives vendors themselves acknowledge that they don't seek to fully displace Microsoft on the desktop.
  • The real story: alternatives represent leverage in MS Office upgrade decisions. So what is the real impact on Microsoft? While their market presence remains low, the alternatives' impact on Microsoft Office upgrade cycles is more significant. With more choice, Forrester finds productivity decision-makers delaying Office upgrades as they evaluate the alternatives as part of the sourcing process. Increasingly, we find that clients are using the very presence of alternatives as a way to gain leverage in Office upgrade negotiations. We expect the role of office alternatives in the market only to grow as vendors make improvements to close the functionality and compatibility gap, and as buyers continue to show interest in cutting costs by provisioning differently to different types of users.

What's your take? Will Office alternatives ever gain a material foothold in the enterprise market?