Will Managed Service Providers Back Microsoft Exchange Online, SharePoint Online?
Microsoft says Exchange Online and SharePoint Online are now ready for deployment, with 100 new partners and managed service providers signing up to offer the hosted systems ever week.
But that’s not the entire software as a service (SaaS) story from Microsoft. The software giant is preparing Office Communications Online — a hosted unified communications package. And Microsoft hints that it’s preparing network administration and perhaps even a managed services platform for 2009.
So, are MSPs eager — or worried — about Microsoft in the on demand world? Here’s some analysis.
To get a feel for Microsoft’s Saas strategy for partners and customers, check out Microsoft.com/online or visit the company’s list of SaaS solutions.
Are MSPs Onboard?
Microsoft has generated some fear and concern among partners who worry about the software giant promoting SaaS applications directly to customers. But in a press release issued today, Microsoft stated:
“Since July 2008, more than 1,500 companies have enrolled in the Microsoft Partner Program for Microsoft Online Services, with 100 more joining every week. These companies are realizing a wide range of revenue opportunity that spans reselling, migration, customization, consulting, training, support and application development, and integration services.”
I wonder: Are all of those partners signing up to support Microsoft or are a few of those “partners” signing up to learn how to potentially compete more effectively against Microsoft and other large software companies entering the SaaS field?
The Strategy for 2009
One other thing for MSPs to keep in mind: The software company recently held focus groups involving MSPs and is rumored to be developing a managed services platform. In today’s press release about the online applications, Microsoft offered some hints about MSP software in 2009:
“Microsoft also outlined its plans to offer new solutions as a part of Microsoft Online Services in the next year. In addition to Office Communications Online, Microsoft is planning to offer a Microsoft Online Services solution that will provide IT management and security capabilities for businesses, enabling IT managers to secure and manage desktops using a Web-based subscription service. These online services will be based on components from existing systems management, identity and security offerings, and will complement Microsoft’s on-premise solutions, as customers begin to adopt cloud-based computing to address specific needs.”
Is Microsoft a friend or foe to MSPs? Frankly, I think Microsoft will find a way to work more closely with VARs and MSPs because the company has been fiercely loyal to the IT channel for three decades.
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Well if you cant beat them join them. I am thinking that this may be a great solution for some of my smaller customers who do not have a big enough infrastructure to house their own boxes.
At the same time, I wonder what MS is doing??? I mean in a way they are competing with themselves, MSPs and Consultants are what keep these guys in business.
My oppinion.
MSP Monstor: Microsoft’s decision to offer SaaS both directly and through partners have generated a lot of criticism from VARs and MSPs.
My opinion: I think Microsoft will ultimately find a balance that rewards partners but also allows the software giant to compete more effectively against Salesforce.com and other SaaS pioneers. But there is going to be a lot of pain along the way since Microsoft right now is on a journey that will involve a lot of trial and error.
Joe,
I think it is inevitable that Microsoft takes this hybrid approach with the SaaS model. But the market is so big there is always room for VARs and MSPs to add value and win customers. In our experience in the SMB market segment we have dealt with two types of SMBs, the one who has internal IT and the one who outsources it to a local VAR or an MSP. The latter segment is where VARs and MSPs have to cater to by building relationships with customers and also by becoming a trusted advisor/CIO of these small businesses.
I think the complexity of IT is such that it is impossible for a large vendor to cater to all types of businesses. There is a big segment of the market who does not want to figure things out on their own and rather focus on their core business. They would rather outsource it to a trusted MSP/VAR to figure everything out and deliver a solution they could use.
Finally, there is no point fighting the tide. Microsoft cannot afford to cede a market segment to a salesforce.com or a google etc. So they need to do something to capture the market segment which is directly consuming applications from the SaaS vendor. That does not mean there is no value VARs/MSPs can add. I strongly believe there is probably 50% of the SMB market segment who are not comfortable with consuming business applications directly from the SaaS vendor. They would go to their local MSP/VAR who would bring in additional value so that these SMBs can focus on their core business.
Sekar: Yes indeed, it’s time for MSPs and VARs to realize that in some cases they will compete with Microsoft, but in the vast majority of cases they will cooperate with Microsoft.
Solutions providers have walked that fine line with Oracle and others for years. Time to do the same with Microsoft — though I’m sure some readers strongly disagree with me…
VAR yes. MSP no.
That is, a VAR is called a VAR because they move product and pick up a fee for their effort.
An MSP doesn’t add value by doing product integration, mixing and matching clouds and hybrids or whatever. They add value by providing MANAGEMENT services.
This begs the ultimate question: How does an MSP integrate a hosted service offering from the likes of Microsoft into it’s value proposition – i.e., the single SLA for all of the customers systems, software and devices. If Microsoft is providing the back end management, where does the MSP fit? Can the MSP layer in it’s flavour of choice remote monitoring package to regain control over the service SLA when being run from Microsoft’s facilities? Moreover, can the MSP or the customer decide where their data will ultimately reside? Or is this another ‘trust the cloud’ pitch? These are the questions that need answering.
I remain a vehement proponent of the MSP carving it’s own path and not getting sucked in to a dangerous game whereby Microsoft (or others for that matter) contracts begin to creep into the customer’s overall IT support and management. You can’t go wrong when you maintain control over your own destiny. So long as Microsoft does not discontinue SPLA or standard licensinc models, there is *no* reason a real MSP should succomb to becoming a reseller.
If I were a bulldog journalist (ahem, Joe), I would call Microsoft out any claims that they are signing up scores of real MSP’s to this program.
Vars, naturally. *Real* MSPs? I’d be surprised.
Hey John: Um, I think I spend plenty of time calling out Microsoft on their claims as I blog away from my MacBook Pro or Ubuntu desktop 😉
-jp
John,
Good to meet you here. If I am not missing something Microsoft is following a hybrid approach. They have Hosted Exchange, Hosted CRM for partners who could host them in their own data center and offer them in a SaaS model on their own. And with Exchange online etc. Microsoft is going direct and/or through pure resellers. So given that Microsoft is giving these options, MSPs who would like to have control of their infrastructure can host everything in their own data center and offer managed services to their customers. And of course the customers they need to go after are the ones who don’t want to deal with anything IT and are looking at their local VAR or MSP to take care of it.
Also if Microsoft delivers on what they have announced with Azure then there is going to be a lot of potential for MSPs or VARs to add value and provide custom solution to their SMB customers even if everything lives in the Microsoft Cloud.
BTW, I tend to use VAR and MSP somewhat interchangeably because I think most VARs are trying to become MSPs as opposed to pure resellers who just resell without much value add.
Sekar
Sekar –
I agree with you in your analysis of Microsoft strategy and deployment options.
I just wanted to be clear that there really is no room for MOS if you are in the MSP business or hope to be in the future. If you go down the road of using Microsoft SaaS offering or even Azure, for that matter, you are firmly rooting yourself in a legacy business model (reselling). (Now, I’m not saying the VAR business is a bad thing. I know some guys that retired off of buying kit and software for $1.00 and moving it to someone for a $1.15.)
So with that established, I see self contained software providers as having a rather limited market. Limited, at least, in proportion to the full scope of the chanel. Microsoft knows this too.
Here is where you hit the nail on the head: “given that Microsoft is giving these options, MSPs who would like to have control of their infrastructure can host everything in their own data center and offer managed services to their customers.”
Thank you. Now let’s open Pandora’s box a bit and ask what percentage of real or aspiring MSP’s have the data center foot print and infrastructure necessary to achieve the level of scale necessary to equal or better the cost of doing business at one of Microsoft, Salesforce, Amazon or Google?
Herein lies what we feel is going to be the real battle ground in the next 5 years. 🙂
sorry, I meant “channel” not “chanel” above… before anyone asks, I don’t think Microsoft is interested in the perfume market (yet) 😉
I think there is always going to be a play for providers. I will say however that these types of plays make me want to look more closely at open source solutions.
One question I have, and cynically speaking, I may already know the answer to, is this: With the near ubiquitous use of Blackberries in the business community, will they support BES connectivity or will this be an area where other providers such as USA.net maintain a competitive advantage?
Rick, you’ve stumped me on that one. I will take a look and let you now what I find.
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