If you listened carefully last week at TechEd then you probably heard Microsoft announce that big companies can now buy Microsoft-hosted versions of Exchange, SharePoint, and Office Communications Server. Check out this article and this one written by Nick Hoover and published in InformationWeek.
The summary is that large customers like Energizer are already paying Microsoft to host, manage, and deliver business class email services in a utility model. Of course smaller business customers (those with limited IT staffs) have been purchasing hosted Exchange services for years from the likes of Apptix and Intermedia. Furthermore, in the hopes of delivering software as a service and business class email to millions of small businesses (those with non-existent IT staffs) Microsoft is now offering OfficeLive.
At the end of the day – like most people – Microsoft believes that SaaS is inherently valuable to all segments of the market – ranging from very large customers, down to very small customers. In fact, Ron Markezich, VP of Managed Services was quoted as saying, “you could see all of our products being available as a service in the future." If this is true, then Microsoft is clearly operating in the early stages of a massive and difficult shift from “license oriented” customer relationships to “service oriented” customer relationships.
I personally spent 3.5 years at Groove Networks where I had the great pleasure of working for Ray Ozzie. IMHO, if anyone is capable of assisting MSFT in this herculean transition then surely it is Ray. But it will not be easy. In fact, it is guaranteed to be a hugely disruptive effort, especially for (A) Microsoft’s shareholders who have become quite comfortable with fat margins associated with traditional software licensing models, and (B) Microsoft’s customers who have never once had to deal directly with Microsoft from a service and support perspective.
Of course, the biggest question from my selfish perspective is what does this mean for Microsoft’s channel partners? VARS, Solution Providers, Telcos, and hosters? All of these ecosystem players are clearly studying the implications of SaaS on the overall landscape. Based on recent events they have to be saying to themselves, “let me get this straight - Microsoft is competing directly with me at the low end with Office Live, and directly with me in the mid-to-high end with Exchange Live and SharePoint Live". So where does the channel play?
I don’t profess to know the answer, but I do believe that one of the keys to succeeding in the future of SaaS (especially for Telcos and hosters) is to own the customer relationship and avoid being further relegated to commodity provider of ping, power, and pipe. In general, I think channels should pursue things like Tradespace, Workspace, ePoint, etc. If the global technology services channel (and in particular Telcos and hosters) don't innovate to shape their own SaaS product roadmaps, then I suspect their future will be defined by increased churn, shrinking margins, and early death.
The good news is that there are definitely options out there in the world of SaaS. So look carefully – and be sure to study Microsoft’s offerings at such time they become available. But, above all, be sure to find ways to control your destiny.