During the Microsoft Worldwide Partner Conference 2009 (WPC09), multiple briefings and interviews gave me a clearer — though certainly not perfect — view of the software giant’s SaaS (software as a service) and cloud strategies. Plus, I began to see the implications for VARs and managed service providers. Here are some thoughts.
Heading into WPC09, my two biggest complaints with Microsoft involved:
- Limited SaaS revenue opportunities for VARs and MSPs. My concerns involved Microsoft’s partner strategy for BPOS (Business Professional Online Suite), which includes Exchange Online, SharePoint Online and other SaaS applications.
- Limited independent software developer (ISV) opportunities for Microsoft’s traditional application partners.
Microsoft didn’t address all of my concerns. But the company took the time to answer all of my questions during briefings with the BPOS and Windows Azure (cloud computing) teams. And in some cases, I was impressed with Microsoft’s responses.
SaaS: Challenges and Opportunities
Many attendees — including HTG peer group founder Arlin Sorensen — are trying to figure out how to drive real profits when Microsoft’s BPOS commissions are limited to an 18 percent referral fee (year one) and 6 percent for every year thereafter. To paraphrase Sorensen, 18 percent of a super-low price essentially is a super-low commission.
But Microsoft’s Eron Kelly, senior director of business services online marketing, made some compelling points for BPOS. He says more than 5,000 partners have signed up to become BPOS resellers, and early partners are earning as much as $167 per desktop in various consulting and managed services fees. Here’s a closer look at Kelly’s business case for BPOS.
Windows Azure: ISVs In the Cloud?
Meanwhile, Microsoft made a rather interesting case for its Windows Azure and SQL Azure cloud services.
Here’s the setting: In the 1990s, Microsoft worked overtime to ensure ISVs supported Windows NT Server and SQL Server. Now, Microsoft is working hard to ensure existing ISVs and new ISVs introduce applications that run in the Windows Azure and SQL Azure clouds.
Already, there are signs that big-name offerings — like the MySQL open source database and SAP Business ByDemand application — will be available on Windows Azure.
Rivals Coming
Windows Azure, SQL Azure and BPOS applications will face intense competition from Amazon Web Services and even Microsoft’s own partners, where organizations like Azaleos, Intermedia and mindSHIFT GroupSPARK host Microsoft applications on their own.
No doubt, Microsoft’s SaaS and cloud efforts are works in progress. But the company’s Azure and BPOS strategies became considerably clearer during WPC09.
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Posted In: Software as a Service and Hardware as a Service
Tags: Exchange Online | Microsoft BPOS | Microsoft Business Productivity Online Suite | Microsoft Cloud | Microsoft SaaS | Microsoft Windows Azure | Microsoft Worldwide Partner Conference 2009 | SharePoint Online | WPC09
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So Joe,
From an IT role perspective, is MS toying with a ‘provider only role’ offering? The introduction of MySQL and other ‘open-source’ initiatives into this cloud seems an interesting direction.
I keep reading about the death of the CIO, however, somewhere strategy must meet utility.
When your internet application is as reliable, available and usable (responsiveness) as the plain old telephone system (POTS) then who provides what comes out of the ‘plug’ could be anyone (ATT, DELL, Google, MS, or Apple). Albeit the plug might be wireless.
So how in your opinion does MS continue to add value to what comes out of the ‘plug’?
Hey Brad: Great questions. I am in a meeting but will definitely offer some perspectives today.
-jp
Brad: Here are a bunch of thoughts…
1. Death of CIO = false. Consider the situation at our company. All of our applications are either hosted or SaaS. But we still need strategic leaders to decide on IT solutions that drive our business forward. We then need tactical managers who pick and choose the most ideal SaaS and open source components to snap together. And then we need some really sharp developers who can do some solid customization for us. Notice that I didn’t mention a need for a pure reseller. Our business doesn’t need resellers. We need a few strategic advisors on IT, cloud and SaaS.
2. Open Source in Microsoft’s cloud = True. A lot of folks forget that leading open source apps (MySQL, SugarCRM, etc.) all run on Windows Server. So, I’m hardly surprised that Microsoft will welcome open source apps into the Windows Azure cloud. The Windows 7 desktop team could learn A LOT from that strategy. Back in the Azure cloud, the big question is whether open source app providers will actually take the time to embrace Microsoft’s cloud. That’s still open to debate.
3. Can Microsoft and managed service providers add value to what comes out of the plug = yes. But the answers are still evolving. Many of Microsoft’s most successful partners are customizing hosted SharePoint for customers. Other VARs/MSPs are becoming SaaS specialists that move open source applications into Amazon.con’s cloud. Look at Levementum and OpenBI as two successful integrators that have mastered cloud opportunities.
Thanks again for raising great questions. And I concede: My thoughts contain my strong opinions rather than hard facts. So, a lot of this is open to debate.
-jp
Your third point on how MSPs provide value to Cloud Services is the central question.
MSPs need to think of these services as simply another great new technology that can add value to their end customers. Cloud Services can simplify and remove some of your old tasks and sources of revenue (e.g. managing an Exchange Server). However they also add an entire new layer of complexity and therefore opportunity, while increasing the need for a single point of management, which is at the heart of the MSP value proposition.
Your customers only care about whether their applications are working as expected. To reap the rewards for addressing this emerging opportunity MSPs need the ability to monitor, triage and remediate issues that may occur anywhere across this more complex environment.
Microsoft clearly understands this (see http://www.microsoft.com/online/partner/solutions-showcase.mspx ) where Level Platforms Cloud Services monitoring is highlighted. We enjoyed the opportunity to demo these features and revenue opportunities to hundreds of solution providers at Microsoft’s BPOS booth at WPC.
There is still a lot of business around managing local PCs and servers but the big new opportunities for growth and profit are all about helping your customers utilize emerging technologies. Cloud Services has to be near the top of the list.
Peter Sandiford
CEO Level Platforms
http://www.levelplatforms.com
Peter: Sorry for my belated reply. Planes, trains and automobiles.
SaaS and BPOS sessions at Microsoft WPC were crowded. But many of the attendees were fearful of the offering(s) and the implications.
At the least, I think MSPs need to try a project or two involving BPOS or another set of SaaS applications.
Some SaaS partner programs won’t be worth time/money.
But at this early stage, it seems like trial and error — and a lot of networking with peer MSPs — is the only way to succeed. In particular, I suspect peer group members are speed dialing each other regularly to get a feel for early SaaS partner programs.