Microsoft Wins Huge European Cloud Deal
It’s one small step for Microsoft’s cloud software strategy, and one giant leap for UK’s Royal Mail Group. Specifically, Royal Mail Group’s 30,000 employees will leverage Microsoft’s Business Productivity Online Suite (BPOS). Computer Sciences Corp., a massive integrator, won the SaaS and cloud deal for Microsoft. Here are some details and early perspectives for smaller managed service providers (MSPs) and integrators.
As you may recall BPOS is part of Microsoft Online Services, which includes Exchange Online, SharePoint Online and other SaaS (software as a service) offerings. Microsoft BPOS and Google Apps have been competing for big SaaS deals across the globe. A few weeks ago, the City of Los Angeles sided with Google Apps.
Now, Royal Mail says it will work closely with CSC’s cloud team to embrace Microsoft BPOS. According to a CSC press release:
“The new contract is an industry first, with CSC being the first Microsoft partner to lead and win a cloud computing services agreement of this scale. Under terms of the contract, CSC will provide Royal Mail Group’s 30,000 employees with access to new IT services using Microsoft’s Business Productivity Online Suite (BPOS), part of Microsoft Online Services. CSC will also provide first line helpdesk support.”
For smaller MSPs and integrators, Royal Mail Group’s BPOS embrace provides a timely reminder: Although Microsoft will wind up competing with some integrators for big SaaS deals, I suspect many smaller engagements will still be led by VARs and integrators.
Competition Ahead
Still, some channel-centric executives are worried about big SaaS providers moving in on small VARs and MSPs. ConnectWise CEO Arnie Bellini, for one, has expressed concern about an eroding “last mile” of business for solutions providers.
Also of potential concern: How much money can MSPs and VARs expect to make from Microsoft BPOS or Google Apps? The real answer remains open to interpretation. Microsoft cut SaaS prices in early November 2009. And Google Apps doesn’t provide much up-front revenue to partners, though Google seems to be gaining momentum with a growing number of MSPs, according to our current MSPmentor 100 survey, which closes Dec. 11, 2009.
Meanwhile, Microsoft partners like Intermedia have introduced Hosted Exchange 2010 and are preparing to introduce white label programs for VARs and resellers. Also, Intermedia is working with the Ingram Micro Seismic team to deliver Microsoft SaaS applications to MSPs. In short, channel partners have plenty of paths for potential Microsoft SaaS options.
Overall, the Microsoft-CSC win with Royal Mail Group is strategic and significant for Microsoft’s cloud strategy. I’ll be curious to see if Google counters with another Google Apps win in the days ahead.
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The money for MSPs from cloud services will come from ensuring the new applications deliver the intended performance expected by the end customer. The SMB customer does not care much where their email comes from but they sure want it to work and hold someone accountable for fixing it when it doesn’t. In the above example, CSC will certainly be making their money from services not resale margins and this applies even more to SMBs
Remote monitoring and management of cloud services from the same dashboard used to view local devices, networks and applcations is the core requirement for MSPs in 2010 and beyond. When email isn’t working MSPs need to be alerted, quickly identify the source of the problem and fix it. With hosted email this could be outages or slowdowns at the provider site or more likely bandwidth usage or device configuration changes in the local infrstructure.
How do MSPs make money? Delivering an end customer experience and taking full responsibility by manageing increasing complexity that neither the vendor nor the end customer can provide.
The critical requirement to profit from the biggest shift in technology (and IT spending) in this decade is to adopt unified remote montoring and management of cloud services and SaaS applications in the MSP’s RMM platform and offer the critical new services your end customers need to succeed in this new computing era.
Peter Sandiford
http://www.levelplatforms.com
Peter: I agree — somebody (MSPs…) will need to bring order to all of these cloud services for end-customers. But it’s going to take a ton of education.
In some ways SaaS and MSPs are like electric utilities and electricians. When the utility (electricity or SaaS) goes dark customers typically call the supplying service provider for help. It will take time for end-customers to realize they can also call in more personal help (the electrician/MSP) to further optimize/maintain everything.
-jp
Well I imagine this was a ‘sale of the century’ for CSC and expect also that Microsoft was close behind with all the discounting incentives possible to make it happen.
Royal Mail is a soft touch right now. What the rest of the world probably doesn’t know is that they are one of the most inefficient privatizations the British Government has managed ever, and that they are always gasping for financial handouts.
This is ‘low Hanging’ fruit and no real achievement in my view. Did CSC re,meber to give discounts big enough though that they can afford to get their postal delivery service back up and running and out of the go-slow grip of the militant British unions?
A political sale if ever I saw one.
MetaconomyCEO: Can you give us any background in terms of who you are? I agree — Microsoft generally does discount heavily to get traction with new product launches. I was it all the time when Windows NT Advanced Server and BackOffice launched. And I’m sure customers will see it again with BPOS. But a win is a win, and this is a significant win…
-jp