Partners not forgotten in software-as-service plan
At Microsoft's worldwide partner conference in Boston earlier this month, executives shed light on the role its global partners might play in the firm's software-as-a-service push.
"We're 100% convinced our organisation's transition in the next five to ten years will require bringing our partner community with us," CEO Steve Ballmer said in his opening address. “There'll be services we host and services you host. There'll be services we deliver that you will get commission for."
Ballmer sought to reassure partners, saying the introduction of the 'Live' environment would not result in any major impact on the core of their business with Microsoft in the next year.
He said it was seeking feedback on how the online strategy would work over the next few years.
"It's for us to define the business model for how we work together," he said.
Microsoft said it would use a Live Advisory Council, part of its established partner council meeting system, to get feedback on how software as a service could work for partners. When asked by Reseller News if the council was a global initiative, corporate vice president Allison Watson said it may be appropriate to establish regional 'Live' councils.
Chris Caposella, corporate vice president of Microsoft's business division product management group, said Microsoft would "drive huge business" around Office Live, Windows Live and the most recent offering — Dynamics CRM (customer relationship management) Live, and said software plus services would be a big part of the firm's future. He admitted the company didn't yet have all the answers, but announced a range of partner opportunities centred on advertising, hosting, referral, resale and customisation.
Microsoft CRM Live will be operated and managed by Microsoft within its Windows Live datacentres in the US, and uses the same code base as the on-premise and partner-hosted versions of Microsoft CRM. The company expected it would be released in the US in the second quarter of 2007.
Caposella said there was a $1 billion global opportunity to resell Dynamics CRM Live services, which he said integrated well with Office Live.
Partners would be able to customise and host such services, or switch to on premise (installed locally).
"You don't have to have a full solution, you can change the model as you see fit," Caposella said.
The CRM Live offering joins others by Salesforce.com and SAP in the hosted CRM market, and Ballmer said it was "maybe the single most inevitable announcement in the history of Microsoft".
Partners would also be able to create Office Live-hosted business applications, websites and Microsoft Share Point sites for their customers, which could then be resold.
"You can keep your add-on Share Point IP and there will hopefully be a directory created to allow resale," Caposella said.
He said Office Live, funded through advertising and subscription fees, made it very easy for partners to create websites and Share Point sites for small and midsize business customers. He said there would be a referral fee for partners who signed people to Office Live.
Microsoft also introduced the online Ad Centre service, where partners could promote their business online and refer customers to advertise.
Watson said business around the Live product offerings was a "whole different pie" rather than a new way of doing business, and offered significant opportunities for partners.
"There are 20 million small and medium businesses around the world that don't have a server, but are spending a lot on technology. They may not ever get a server, but most of them will buy computers, hopefully with Office and Vista."
Ballmer said partners would be compensated for signing up Dynamics CRM Live subscriptions.
New Zealand IDC analyst Jenna Griffin and Complete Solutions CEO John Biggs (whose firm last year won Microsoft CRM Partner of the Year) agree it will take a while for software as a service to be widely adopted here, and partnerships may result as adoption increases.
"It's probably one to two years before we'll see something like they're offering in the US," says Biggs. "A lot of people will be keeping an eye on software as a service and how to deliver software and keep it current.
"There's probably a component of trialling it before it's brought here."
Griffin says low broadband penetration will continue to affect the speed of uptake. "When you look at New Zealand and the rest of the world, it's embarrassing. It's also the technologies they have access to that we haven't.”
She says broadband uptake is pretty good at enterprise level, but small and medium businesses are lagging.
Griffin also believes Microsoft would have to offer significant subscription referral fees to persuade partners to proactively promote its Live offerings.
Biggs says Complete Solutions wants to focus on its core business, and if it was approached about hosting CRM Live, it would partner with another company.