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Microsoft pushes for SaaS

SMBs the target, partners and ISVs the weapon

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Microsoft is pulling out as many stops as it can to position itself as a leading contender in the burgeoning Software as a Service (SaaS) marketplace, not least with events such as the latest Architects Forum held this week in its Reading fastness.

The Small to Medium-sized Business (SMB) sector is very much in the company's sights, and its partner channel is the weapon it is planning to use to grab a share of the business.

"The trend now is that SMBs don't want their own IT, they just want access to services," Gurprit Singh, director of emerging technologies developer and platform group Microsoft UK, told the assembled architects.

"But there is still a need for flexibility, with services hosted onsite or remotely and perhaps running a mix of the two."

He cited Exchange as an example of this, in that it can be hosted onsite or in the cloud, and can attach externally hosted services as required.

According to Matt Deacon, chief architectural advisor for the developer and platform group, this issue can be seen as part of the general problem of managing innovation for ISVs, particularly where SaaS as a service delivery vehicle starts to make a greater impact as a disruptive technology.

Office as a services composition vehicle

Deacon says: "Office has, of course, been a mechanism for bringing together applications functionality since the days of COM. We are just extending that idea to include online external services, such as SharePoint."

Said like that, he seems to suggest it is a purely Microsoft-centric capability, but he denied this, saying it could work with any web service, with Office being used to "customise the user experience".

Deacon highlighted some of the advantages that SaaS brings to the SMB market that the partners could exploit, such as Pay as you Grow, a fast start, little or no user training required, and vastly reduced IT capital expenditure.

Benefits for the ISVs include the fact that it does give them better application lifecycle control, as well as important business advantages - such as far easier access to the "long tail" marketplace of the small and niche market customers where the cost of sale means they are generally not worth pursuing.

A very practical overview of why ISVs should consider operating in the SaaS/on-demand marketplace was given by Microsoft Architect Eric Nelson, and the list of reasons is quite long.

For example, there is the chance to gain predictable revenue, which is now often referred to as the annuity business model where revenue is a constant drip-feed that can be planned for far better than the traditional feast/famine model. It also gives greater agility to meet new requirements when entering new markets and access to new revenue sources through the ability to sell to the "long tail" of small customers.

The ability to plan revenue better can lead to more, or at least better, investments in R&D, while the reduced requirement for customisation can dramatically cut sales cycle times and sales costs. "Once you say, 'we can customise this for you', customers will ask for 4,000 changes and you are straight into protracted negotiations, complex testing, and real problems with future upgrades that are not compatible with past customisations."

The alternative is to make applications easily configurable while leaving the core code alone.

Maintenance and support costs are reduced because fixing a bug for one customer automatically fixes it for all, even if they haven't come across the problem yet. If a real need for some beneficial customisation is found it can be put into the core code for the benefit of all customers.

Lastly, SaaS gives a good opportunity to build greater customer loyalty through the ability to respond faster to customer needs - and sometimes have the response incorporated before they enquire about it. There is also the opportunity to respond faster to competitive offerings. One of the best levers on customer loyalty, he suggested, was the ability SaaS gave for the try-before-you-buy business model.

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