On plans to expand its work in the managed services market, Bob Muglia, senior vice president of Microsoft's server and tools business said the move has highlighted "shortcomings of our software".

Muglia made the comments in reference to Microsoft’s provision of messaging and collaboration services for two clients, and as it looks to expand its services targeting companies looking to reduce costs from their internal IT management.

"It's been a real learning experience for us," Muglia said during his keynote at the TechEd IT Forum in Barcelona. "To say that we found some issues would be an understatement."

Muglia stressed that the program, which he called Microsoft Managed Services, is still in an incubation phase. One problem has been multi-tenancy, or having more than one organisation utilizing a server's software, Muglia said.

Another has been ensuring internet access and data access is reliable and swift. "Our software needs to work across the Internet transparently," he said. "We need to transform the way we get data back and forth."

Over the next year, Microsoft will take on more customers, primarily focusing on messaging and collaboration services, he said. Eventually, Microsoft could offer desktop management, although Muglia said that task is complex and the company is studying it.

"We think of it as an incremental opportunity on top of our software business," he said.

Muglia said Microsoft's offering would not create "significant" conflict with its partners offering managed services, since the potential market will be big over the next decade.

Microsoft has been building its managed services offerings through several acquisitions. It bought FrontBridge Technologies last year, which provided email security and archiving.

Muglia said FrontBridge brought compliance-related technology to round out its services offering. In March, Microsoft renamed the technology as Exchange Hosted, offering filtering, encryption, archive and continuity-related services.

In May Microsoft also acquired Softricity, a developer of software that allows streaming of applications to desktop computers in addition to tools for desktop management.