Warren Wilson
Microsoft drives change in online services
After a year spent building and tuning the new vehicle in its Software + Services strategy, Microsoft has handed the keys to its partners and told them it's theirs to drive - and to customize. At its Worldwide Partner Conference this week in Houston, the vendor announced two new suites of enterprise hosted subscription services that it will launch later this year under the Microsoft Online Services (MOS) banner. It also provided details, for the first time, of the packaging, pricing and partner compensation models for MOS.Software + Services (S+S) is often described as Microsoft's answer to the software-as-a-service trend, but it's broader than that. It's a hybrid solution model that banks on the continuing relevance of traditional software as well as the growing importance of cloud computing. In practice, it combines both models in solutions that can be deployed on-premise or be delivered on a subscription basis, either by Microsoft itself or by a partner. Traditional software still constitutes the vast majority of the market, of course, and partners have been hosting Microsoft solutions for years. So the newest element in S+S is the solutions that Microsoft will host itself - and that it's counting on partners to sell.One of the new enterprise subscription suites that Microsoft announced this week is aimed at “deskless” workers that have only sporadic computer access. The Deskless Worker Suite has two components. One, called Exchange Online Deskless Worker, is based on Exchange Server and provides email (via the Outlook Web Access online email client), calendar, global address lists and malware filters. The other, called SharePoint Online Deskless Worker, is based on SharePoint Server and provides access to portal and team sites and search functionality so that employees can find information on such things as benefits, training programs and company policies. Customers can subscribe to both services for $3 per user per month, or to either one alone.The other new subscription offering, called the Business Productivity Online Suite, allows employers to provide new capabilities to information workers without paying large upfront fees for traditional software licenses. This offering includes Exchange Online, SharePoint Online, Office Communications Online (for instant messaging and presence capabilities) and Office Live Meeting for web- and video-conferencing. This suite will be priced at $15 per user per month, though Microsoft will also offer the components individually.To enlist partners in selling the online services that it will host itself, Microsoft is offering them 12% of the first-year contract price and 6% of ongoing subscription fees, for a total of 18% of the subscription value in the first year.Microsoft says it is committed to helping partners succeed; after all, it depends on them for some 96% of its revenues. To that end, it describes a number of ways in which partners can leverage the new model: they can address new customers with large populations of deskless workers (such as nurses, flight attendants and factory workers); they can sell new subscription services to existing customers; and they can increase sales velocity by leveraging the fact that online solutions can be deployed instantly, avoiding the weeks or months it could take to build and run a pilot solution.Key to partners' success, however, will be their ability to provide some additional value on top of the plain-vanilla hosted solution - perhaps by helping customers migrate from other platforms or, often, by customizing the subscription services for the particular industries they serve. Microsoft has spent the last six months or so training the 1,400 account managers that serve its 30,000 top partners, and creating online resources that help partners figure out what kinds of additional services to offer.Microsoft is clearly encroaching on some partners that have themselves been providing plain-vanilla hosted solutions based on Microsoft's products. But the vendor has been signaling its intentions for some time, so this week's announcements should take no one by surprise. Nor is the need for partners to provide higher-value solutions unexpected. After all, plain-vanilla hosting is destined to become a low-margin, commodity business, if it isn't one already. To a large extent, Microsoft is simply accelerating a transition that partners would face anyway - but it's also offering them tools they would otherwise have to create by themselves.
