Verizon Business targets SaaS niche

* Verizon Business touts deal with NOW Solutions

Verizon Business is touting a new deal with NOW Solutions, a human resources software manufacturer, as a sign that it is gaining ground in its goal of providing network infrastructure and services for hosted applications.

Verizon Business will host NOW Solutions’ new Web-based HR software at its Richardson, Texas data center. Verizon Business is providing data center floor space and network connectivity to support NOW Solutions’ new software-as-a-service (SaaS) offering.

"We have many customers in the [SaaS] space. We see this clearly as a growing market," says Christopher Gesell, director of product marketing for IT solutions at Verizon Business.

Gesell says that Verizon Business has attracted 10 SaaS customers during the last two years. "We’re starting to see more interest in this model," he adds.

The length and dollar value of the NOW Solutions contract were not disclosed,

"We’ve entered into what we consider a long-term deal," says Pete Ashey, executive vice president of business development for NOW Solutions. "We have a number of customers asking us to be placed into this environment. We have two deals pending, which are large human resources outsourcers. This deal will most-likely grow exponentially. It’s got the potential to be a multimillion-dollar deal, but at this point it’s not."

NOW Solutions says it considered four top-tier service providers before choosing Verizon Business.

"For the service and the service-level agreements being provided, Verizon Business was the most cost effective," Ashey says.

Verizon Business plans to ramp up its market share in the SaaS niche over the next three years. The company will announce specific products for this niche in 2007.

"We’re in the process of developing specific programs around enabling [SaaS] companies," Gesell says. "We will be making announcements in a couple months. We want to start building momentum about what is coming in 2007."

NOW Solutions is the first SaaS customer that Verizon Business has announced.

NOW Solutions, a 45-person developer based in Fort Worth, Texas, sells HR and payroll software to companies with anywhere from 500 to 40,000 employees. With its new hosted offering, NOW Solutions will allow its customers to pay to use its software on a month-to-month basis rather than having to install and license the application.

NOW Solutions went live with its SaaS offering at Verizon Business’ Texas data center in January. The software company plans to add Verizon Business data centers as needed, starting in Canada where it has several customers.

"The reason we went with Verizon is that they have built out this wonderful infrastructure and have already absorbed the development and setup costs for it and they are able to spread that cost out over multiple customers," Ashey says. "If we did this ourselves, I don’t think we could get the uptime, bandwidth and contingency planning as cost effectively as with Verizon Business providing the service."

In addition to supporting software vendors rolling out Web-based applications, Verizon Business provides its own hosted applications including e-mail, instant messaging and Web conferencing. Gesell says Verizon Business is starting to see more interest in these hosted applications from enterprise customers.

"We are seeing customers adopting [SaaS] for their communications applications, but the market for ERP and CRM at the enterprise level – the adoption hasn’t been there yet," Gesell says. "Ultimately, it will come down to whether enough customization can be delivered in the [SaaS] model."

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