Microsoft's SaaS Strategy In 450 Words or Less

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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