MSPs Push Into Growing SaaS Hosting Businesses

Cloud computing discussions abound in MSP circles. Will new cloud offerings outflank the managed services business?

John Moore

July 17, 2012

3 Min Read
MSPs Push Into Growing SaaS Hosting Businesses


Cloud computing discussions abound in MSP circles. Will new cloud offerings outflank the managed services business? What skill sets do MSPs need to compete in the cloud era?  Where can MSPs take advantage of and sell cloud services? Amid those concerns, SaaS hosting emerges as one field where MSPs can ride the cloud wave — without being swamped by it. Consider the case of Tenzing Managed IT Services.

The company derives 40 percent of its business from managed hosting services in support of SaaS. A company spokeswoman says Tenzing’s SaaS revenue is up 15 percent since this time last year. Tenzing focuses on hosting solutions for e-commerce companies, integrators and SaaS providers. Last week, Tenzing announced a deal with Heiler Software, a Product Information Management (PIM) software vendor. Under this arrangement, Heiler will offer its North American customers Tenzing’s managed hosting services.

Heiler Software’s PIM software represents a new segment for Tenzing and one that ties into the company’s e-commerce work, which contributed 45 percent of Tenzing’s business.

“We have a number of other SaaS-based customers who are part of our expanding e-commerce ecosystem,” the Tenzing spokeswoman noted. For customers such as Heiler Software, Tenzing markets itself as reducing the risk and cost of delivering e-commerce and SaaS applications.  That message seems to be working — and not just at Tenzing.

Hosting Health IT

Connectria Hosting, a managed hosting provider based in St. Louis, last week announced a SaaS hosting deal with EHR Pathway in the health IT space. EHR Pathway tapped Connectia to host and manage its BizMed Toolbox, a suite of applications that aim to help physicians’ practices with such tasks as revenue optimization and regulatory compliance.

EHR Pathway, according to Connectria’s announcement, typically targets practices with less than 10 clinicians, focusing on their transition to electronic health records, the federal meaningful use program, and Patent Centered Medical Home.

Connectria has developed a specialty in the health IT sector. Earlier this year, the company said an independent assessment confirmed that its managed hosting services comply with Health Insurance Portability and Accountability Act (HIPAA) standards. Connectria’s HIPAA hosting customers include companies such as Quality Pharmacy Management and TCS Healthcare Technologies as well as EHR Pathway.

The healthcare SaaS opportunity began opening up a couple of years ago, particularly as EHR adoption incentives began to fall into place. Solo physician offices and small practices in particular became prime markets for SaaS offerings. SaaS helped — and continues to help — smaller providers acquire EHR without the cost and disruption of an on-premise software deployment.

Other SaaS Projects

Another SaaS hosting example comes from Latisys Inc., a managed services, colocation and cloud provider. Latisys last month said it is providing a “fully managed IT outsourcing solution” to support SOBERLINK’s SaaS solution, which the company says automates the alcohol monitoring process.

MSPs like Latisys emerge as cloud computing enablers in SaaS hosting deals — they’re joining the cloud rather than competing against it. The SaaS relationship, however, is trickier and more ambiguous for MSPs who lack hosting operations and concentrate on managing customers’ on-premise gear.

Here, it’s a matter of allying with cloud providers where it makes sense — online backup services, for example — and offering professional services around SaaS deployments in other cases. The latter could involve front-end consulting services or post-sales integration. The more sophisticated SaaS installations in areas such as financial systems are likely to have quite a few integration points.

Cloud services have indeed complicated MSPs lives. But that’s hardly news for a group of companies accustomed to reinvention. The cloud is just the last stop in an evolution has seen VARs transform into consultants and integrators in the 1990s and into MSPs over the past decade.


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