Microsoft SaaS: Host It Or Resell It?
It could be a sign of things to come. Heading into the Microsoft Worldwide Partner Conference 2009 (WPC09), Computer Sciences Corp. (CSC) has agreed to resell Microsoft Business Productivity Online Suite (BPOS). CSC’s move represents an inflection point for managed service providers, many of which are trying to decide whether to host Exchange and SharePoint on their own — or simply resell Microsoft’s own hosted services.
CSC says the Microsoft BPOS reseller agreement covers:
- Microsoft Exchange Online
- Microsoft SharePoint Online
- Microsoft Office Communications Online
- Microsoft Office Live Meeting
BPOS will surely be a hot topic of discussion at the Microsoft Worldwide Partner Conference 2009, starting July 13 in New Orleans. Some VARs wonder if they can make reasonable margin reselling BPOS. (Check out this Directions on Microsoft article for a good overview of the BPOS strategy.)
Multiple Routes to Success
Meanwhile, Microsoft partners like Azaleos, Intermedia and Level Platforms continue to push forward with hosted and managed services initiatives of their own.
- Azaleos has won some massive Exchange Server outsourcing deals in recent weeks.
- Intermedia claims to be the largest independent Exchange hosting provider, with more than 325,000 managed mailboxes. Now, Intermedia is beta testing Hosted Exchange 2010 with selected VARs and MSPs.
- Level Platforms has rolled out a set of tools that allow MSPs to more effectively manage BPOS applications.
At the same time, some VARs and MSPs are opting for third-party SaaS alternatives — such as the Google Apps Reseller program or the Zoho Alliances Partner Program.
We’ll be sorting through more Hosted Exchange, Hosted SharePoint and BPOS strategies during the Microsoft Worldwide Partner Conference.
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It is no secret and no big deal that when you sell BPOS your fees paid by Microsoft to you as the Partner of Record are fixed (18% in Year 1 that is 12% initial fee and 6% recurring and Year 2 onwards at 6%. The big focus is on how you make money out of services and that is rapidly developing both through the attention of those partners selling BPOS and Microsoft adding functionality to its Online Services. Thinking of…selling Microsoft Online Services? Ask the Smart Questions. If you are selling or looking to sell BPOS this book will provide you the help you need to figure out your services play with BPOS.
Microsoft’s BPOS does present itself to the reseller model, because in the SaaS domain, customers are looking for a ready to use product plus support package bundle. There is room for a value added product to be built over BPOS to make it end user friendly, and also offer service support.
Pankaj: Thanks for your perspectives. My BPOS briefings with Microsoft are this Wednesday. I’ll be sure to report back. If you have any questions about BPOS you’d like me to ask, please let me know.
email: joe [at] NineLivesMediaInc.com
Great question you pose Joe – if I were an MSP I would probably just resell Microsoft. The reason is it is too risky to make the infrastructure investment to become a me-too player in this market – and risk going out of business. You just have to look at a very similar trend over the last 10 years. Hundreds of companies began hosting Exchange, by the time hosted SharePoint came around, many hosted Exchange providers went out of business or closed that line of business. As we have seen there was a lot of consolidation with only a few companies who grew mostly organically like Intermedia, or roll-ups like Apptix. So in the end being a reseller of Exchange did not turn out to be a smart move for most participants. For this same reason I think MSPs are safer just reselling BPOS. One thing I would suggest be done differently this time around is to specialize in a geography by having sales reps on the street, or in a particular vertical. Verticals could include industries or even size of clients. For the small businesses (under 100 employee) I would argue there are hosted collaboration suites that are turn-key, simpler (albeit with less features) and aimed specifically at small businesses; I expect MS channel partners will seek to differentiate themselves by partnering with services like Zoho amp; HyperOffice if they plan on going after the SMB market (since that’s where most of the growth in the collaboration market will be)
Shahab: Your timing/feedback is perfect, considering Microsoft launched its hosting partner program — called Microsoft Communication Services — earlier today at the Microsoft Worldwide Partner Conference 2009 (WPC09).
I’m familiar with many of the solutions you mentioned, but less familiar with HyperOffice. I will check it out for readers. Thanks for your readership and thoughts, Shahab.
-jp