Ballmer: Sorry, Hosting Happens & We Own The Customer

At this week's Microsoft WPC conference Steve Ballmer had to re-enforce the realities of Microsoft's move into cloud services, online Exhange and SharePoint software -- Microsoft doesn't have any other choice, and yes, they're competing with their own hosting partners. That's the reality of web 2.0, cloud services, Software + Services, SaaS, and the like. Do it or lose it. Microsoft most move to this online model to stay relevant and not let others dominate, so it's tough nougies for hosters if Microsoft competes with partners.

The partners' spin on this was that things aren't so bad. Many see the limitations of Microsoft's hosted solutions (customization be one of the biggest limitations) as John Fontana reports in his article. That may also be because Mircrosoft's online offerings are directed at smaller customers and not the enterprise. One partner quoted in John's article thinks this may also be about getting SharePoint into more users hands. Haven Computing CEO Rex Humston, who serves SMB's, says SharePoint isn't used much by smaller customers. It's not intuitive and easy enough for a low savvy user to configure and use.

The key question in the hosted Online Software Services from Microsoft (Exchange & SharePoint for now) is who owns the relationship with the customer, partners or Microsoft. The answer: Microsoft. When Online Exchange and SharePoint is available this fall, customers will go to a Microsoft online software portal site to sign up for services with Microsoft. If the customer is working with a Microsoft partner, the customer will have to associate their purchase with that partner. That's how sign up for online software services will work on day one. Indications are that somewhere down the road, partners will be able to sign customers up themselves without the customer having to take those steps. Support is the other big question I've heard partners ask about. The net-net is calls from the customer's IT person will go to Microsoft. All other calls, from users and such, go to the partner.

So, how do partners differentiate in the world of online software services from Microsoft? Microsoft suggests six areas of opportunity for partners: license sales (sell Microsoft's online software), deploy and migrate (help users get set up on online services and migrate from on premise software), customize (SharePoint designs, doc management and work flows), managed services (training, support, desktop management, desktop optimization, and business process management, new scenarios (same as managed services), and new segments (expand to customers you haven't been serving previously). I'd suggest there are also some others.

SLAs. Hosting partners can differentiate themselves in the hosted Exchange/SharePoint market by offering better SLAs or SLAs Microsoft doesn't. Offer SLAs on uptime, end user experience, or performance guarantees based on the customer size. And provide SLA reports to customers showing how what you provided beats Microsoft's SLA at a better value price.

Give faster, better and more responsive support. Ever been on the phone with Microsoft support? It can be an exhausting process. One partner at the WPC show told me his woes of literally being passed around the world over a 2 day period, re-explaining his problem to each person until he was finally able to get resolution. Give more responsive customer support, or offer gold/silver/platinum level support.

There are also a near infinite number of other products and services one could bundle. Add Blackberry server integration, iPhone setup, remote device management, special SharePoint workgroup applications you've developed yourself, etc. Support none Microsoft technologies link Linux or LAMP stack applications, in combination with Exchange and SharePoint services. Add the things you uniquely do for your customers.

I'm signed up for the beta so I'll report on how things are looking. Stay tuned for more as I dig into these new Microsoft online services.

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