SaaS: What MSPs Can Learn From Hosting Providers

Many MSPs are trying to sort out their software as a service (SaaS) strategies — with an eye toward Hosted Exchange and Hosted SharePoint. The big question: How do you continue to maintain customer control, even as SaaS platforms like Microsoft Business Productivity Online Suite (BPOS) move into the market and launch low-ball pricing? Instead of living in fear, smart MSPs may want to start checking in with large web hosting providers — many of whom have already sorted out their SaaS and Hosted Exchange strategies.

At least week’s Parallels Summit in Miami, most of the 1,000-plus attendees represented hosting companies. But in many ways, the discussions were similar to managed services conferences. On the one hand, Google and Microsoft sponsored the conference. But on the other hand, numerous guest speakers warned hosting providers that they needed to maintain customer control and avoid SaaS platforms that directly billed customers.

Still, I realize one size doesn’t fit all. In the SaaS world, at least four types of partners are emerging:

1. Reseller Agents — In this model, resellers make a commission for driving customers to a specific vendor’s platform. In some cases, the vendor controls the billing (example: Microsoft BPOS). In other models, the reseller controls the billing (Google Apps). Some VARs and MSPs frown upon the agent model because the vendor generally controls the branded service. But be careful of media reports stating reseller agent models are all bad. For some smaller VARs, becoming a reseller agent can become a fast way to fill end-customer needs.
2. White Label Partners — here, VARs and MSPs can rebrand a third-party service as their own. Here, companies like Apptix, Intermedia and Intronis come to mind.
3. MSPs that Build Their Own Apps And/or Hosting Centers — Some larger MSPs and web hosts are launching Hosted Exchange in their own data centers. A few small MSPs made the mistake of chasing this market, only to discover that they lacked the cash and staffing resources to keep pace with massive cloud build-outs like Microsoft BPOS.
4. MSPs that Launch Customer Apps In Third-Party Clouds — We’re starting to hear more and more from MSPs that are moving a few customer applications into third-party clouds like Amazon Web Services. An example involves Levementum deploying ERP and CRM applications in AWS.

Did I miss additional models? I’m all ears.

Staying One Step Ahead

Regardless of which path you choose, the common challenge remains the same: Microsoft aggressively cut BPOS prices in late 2009. And just about everyone I speak with says the Hosted Exchange market is getting bloody.

On the one hand, many MSPs still need to deliver email services to their customers. But on the other hand, MSPs also need to find “what’s next” in order to stay ahead of commodity SaaS markets.

That’s where Web hosting providers come in. During the Parallels Summit, a half-dozen Web hosting providers told me they plan to continue their Hosted Exchange offerings as a base-level option, while making more significant commitments to hosted unified communications. Not by coincidence, the folks at Intermedia and Unison Technologies are currently beta testing a unified communications platform that Web hosts will be able to brand, promote and bill as their own.

The key takeaway: Many MSPs continue to explore how to enter the hosted Exchange market. But I think Web hosts have already moved onto the next conversation: What comes after hosted Exchange? The answer could be hosted unified communications…