Microsoft Clouds Don’t Rain on Small Businesses – a Comprehensive Assessment of Microsoft Online Services

Microsoft80 Microsoft Clouds Dont Rain on Small Businesses   a Comprehensive Assessment of Microsoft Online Services
Pankaj Taneja asked:

Microsoft Goes SAASy


Used to being the unchallenged leader during the early days of information technology, Microsoft never had it as easy since the advent of the internet. No matter the hot new internet technology, Microsoft was forever caught napping. It was never the innovator and forever a laggard in terms of success. Google trounced it at search and online advertising, Yahoo at instant messaging and consumer mail, Blogger, WordPress and Typepad were far better at blogging software, it never even appeared on the battle ground of social networking with MySpace and Facebook ruling the roost.

But there were certain markets, especially corporate markets, in which Microsoft continued at have a strangle-hold, which kept its cash registers clinking, and at a frantic pace at that. These were the PC OS market with its Windows series, MS Office for Office suites, and its prize cash cows – MS Exchange and MS Sharepoint for enterprise messaging and collaboration.

Now, the above mentioned software are essential for every enterprise, and 5 to 10 years back, Microsoft did undoubtedly offer the most robust solutions available. In those days, since every body was eyeing the juicy big business enterprise segment, with their thousands of users implementations and IT budgets bursting at the seams, it was for that audience these software were developed. So although Exchange and Sharepoint required dedicated servers, complicated implementations and dedicated IT to man and maintain the system, nobody really minded, because these mega enterprises had the money and staff to spare.

The Present

But there was a segment which minded it, the small to medium size business (SMB), segment which had neither the staff, nor resources, nor the inclination. Since not many alternatives were available, they either had to bear the burden, or do without these technologies altogether. But in recent times, things have started to change. In the past 3 years or so, a new approach has emerged, spurred on by technology improvements and increased bandwidth – the software as a service approach. And its primary market is the small to mid sized business segment.

In a recent SaaS survey conducted by Cutter Consortium, nearly three-quarters (72%) of the people who responded reported that they are using Web-based solutions to fill unmet needs. More than a quarter of the respondents (28%) are hoping that these solutions will cut their costs by 20%-30%.

It is true that there was some initial skepticism initially about the viability of SAAS solutions, in that it involves letting go of some control and allowing the organization’s critical data lie on a third party SAAS vendor’s servers. But the benefits of this approach have been so overwhelming, and due to providers like and HyperOffice providing SAAS solutions effectively over the years, that organizations across the board, from small to mega enterprises, have been converted.

Microsoft Plays Catchup

With the enterprise market saturated, Microsoft has also been eyeing the relatively untapped small to mid sized business market in the past few years. Considering the success of SAAS with this segment, Microsoft has introduced offered a succession of software offered as a service in recent times, under the Microsoft Office Live banner. But the real success story with this segment was “hosted Exchange” and “hosted Sharepoint” solutions offered by independent vendors; many of them certified Microsoft partners. First, a little refresher:

What is Hosted Exchange (and how it differs from Exchange Server)?

Every company needs dedicated company email for its employees, as well as some basic productivity solutions to lubricate everyday working (task management, calendars, address books). To cater to these universal needs, Microsoft developed Exchange Server whose major features consist of electronic mail, calendaring, contacts and tasks. The front end client for Exchange through which employees access all this information is usually Outlook, but Exchange also supports mobile and web based access (called Outlook web access or OWA for short). But implementing Exchange is hardly easy, as it includes setting up a dedicated server, undertaking a complex Exchange implementation, in addition to additional anti spam and anti virus implementations for the security of the server. Also, dedicated staff needs to be hired to monitor the system and keep it running, and to manage a myriad of complexities that may arise, since Exchange is a vast solution.

Under hosted Exchange however, all aspects of implementation and maintenance of the Exchange implementation are outsourced to the servers of a specialized “hosted services” provider. Customers still get the most of the features of Exchange – dedicated email, shared calendars/contacts/tasks, and premium features like mobile and web access to information (typically at an extra cost). But unlike an in house implementation, where everybody accesses Exchange over the local network, in this case it is accessed over the internet. This approach is especially beneficial for small to medium businesses which are saved the huge costs of in house implementation and instead have to pay a reasonable monthly subscription.

What is Hosted Sharepoint (and how it differs from Sharepoint Server)?

Apart from basic email capabilities, companies also need the ability to manage the company’s information, stored in documents, and the ability for employees to work together on this information. This is what SharePoint, Microsoft’s browser-based collaboration and document management platform does. It can be used to host and create a company’s web site that includes shared workspaces and documents, as well as specialized applications like to do lists, discussion boards, wikis and blogs. But Sharepoint’s power is coupled with its complexity. It’s implementation is no less cumbersome and costly than Exchange. Moreover, it is not end user friendly. Subject matter experts cannot share their knowledge directly; they always have to either go through IT intermediaries, or undergo specialized training which consumes time and diverts attention from competencies.  Knowledge is not dispersed freely through the organization, but is choked by having to pass through the IT bottleneck.

As with hosted Exchange, under hosted Sharepoint, all aspects of a company’s Sharepoint implementation and management are outsourced to third party vendors. Customers can still access all of Sharepoint’s features over the internet, but for a reasonable monthly fee.

Microsoft Takes the Big Services Plunge

As long as the hosted market was not sizable, Microsoft was content selling Exchange and Sharepoint as software products, and let its partners and independent vendors do the hosting. But considering the bourgeoning of the SAAS market lately, and its future outlook, coupled with tough competition from “alternative” collaboration and messaging offerings like Google Apps, Gmail and HyperOffice, MS finally In Oct. 2007, Microsoft finally took the plunge when it announced hosted Sharepoint and Exchange for enterprises with more than 5,000 seats – titled Exchange Online and Sharepoint Online. In Feb 2008, it went one step further by opening these services to all organizations, irrespective of size.

The Hot News – Microsoft’s “Hosted Service Bundles”

Keeping with its recent rapid movement, on July 8, 2008, Microsoft made another announcement, introducing a novel, if not controversial strategy. In addition to offering its hosted services as single offerings, it announced that early in 2009, it would also offer them as “bundles”, a combination of services at a reduced total cost.

Microsoft has introduced two “bundles”, titled the Deskless Worker suite and Information Worker suite. The deskless worker suite is priced at just $3 per user per month, and will include Exchange Online services as well as read only access to Sharepoint Online services. This is supposedly targeted at workers who typically spend only a very small part of their day in front of the computer. The information worker suite is priced $15 per user per month and includes a full range of offerings including Exchange Online, Share Online and Live Meeting, Microsoft’s web conferencing software.

An Assessment

Great Solution?

At first view, it would seem that Microsoft has come out with a great offering. The entire range of Microsoft’s best of breed enterprise applications, rolled into one, available at a very affordable monthly fee. Exchange online for email, calendars, address books, task management and access over the web and mobile; Sharepoint Online for collaboration and customized portals for teams and partners; and LiveMeeting to conduct audio and video conferencing with multiple participants no matter where they are. All at the customers disposal, in a single offering, at an imminently reachable $15.

A good opportunity to validate the parts – as in they have the right idea messagin, project collaboration, document management, Outlook sharing, couple with online meetings.

Think Again

Whenever something seems so perfect, it always makes sense to bring ones guard up, and look closer. The first phrase to reconsider is – “rolled into one” or “all in one”. Does it mean that all of Microsoft’s great offerings have been integrated into a single, seamless solution, with all aspects communicating with each other? Or does it mean something else.

Well, it means something else. All in one refers more to “all in one pricing”. The services remain exactly as they were; only they will cost less when purchased jointly. Individually, Microsoft sells hosted Exchange Online for $10; SharePoint Online for $7.25; Office Communications Online for $2.50; and Office Live Meeting Online for $4.50. So a joint pricing of $15 means a saving of $ 9.50 per user per month.

Moreover, even the separate components of Microsoft’s new offerings are bare bones solutions, requiring implementation and configuration, before a workable solution is set up. This is effort most small to mid sized businesses are not equipped to make, nor do they want to make. Although the pricing of Microsoft’s bundles may be very tempting, a major reason companies go to “hosted service” providers in the first place is that in addition to hosting they also offer “managed services”. All aspects of configuration, integration and maintenance are their hassle. If all the components – Exchange, Sharepoint, LiveMeeting and Office Communications; are to be integrated into a single seamless solution, that will require massive implementation.

So, although Microsoft’s offering looks enticing from a distance, it is hardly the end to end, ready to use solution businesses are really looking for. Microsoft offers all pieces of the puzzle, but they remain separate pieces that don’t fit together. Even the measly priced Deskless worker suite has attracted a lot of flak. The verdict is that it caters to an imaginary class of worker who needs only read only access to company information. Although real life workers of this class don’t access the company’s information systems as much, they often interact with the system in critical ways. An example is a nurse who may need to keep the hospital’s drug stock updated.

Hosted Service Provider’s Perspective

With Microsoft jumping into the fray, and at very competitive prices at that, traditional providers (Microsoft Solution Providers) of Exchange and Sharepoint hosting are certainly feeling the heat. Setting up Microsoft infrastructure on their servers, and further selling it as a service offered them a steady and ongoing revenue stream. But Microsoft offering such services directly will certainly cut into their pockets as they can hardly hope to compete with Microsoft’s pricing.

Microsoft was well aware that the latest announcement would pinch hosted service partners bad, and not intending to cut them out of the picture completely, it made another announcement intended to keep them interested. Partners can resell Microsoft’s new hosted service offering and pocket a percentage of the ongoing revenue. Partners will receive 12 percent per user, per month, up front for a first-year contract, and 6 percent per user, per month, of the ongoing subscription fee. So in the first year, resellers of hosted services will receive 18 percent margins on the subscription value, and 6 percent for subsequent years. But in spite of this carrot, partners are still smarting, because reselling Microsoft services won’t be nearly as profitable as letting out on premise implementations. 

Some Microsoft solution providers are worried that this puts them in the feast-or-famine mode of trying to find the next project to generate consulting revenue as opposed to recurring revenue streams associated with keeping Exhange and SharePoint servers running.

There is Hope

Although hosted service providers who provide bare bones hosted Microsoft products will feel the competition from Microsoft’s new offerings, but there barely are any vendors who do just that. A vital part of what these companies do has always been adding value by offering integration, consulting and management services on top of the basic Microsoft products they host for their customers. And this need for integration, management and consulting still remains because Microsoft will merely offer basic hosting of its products, while end customers need ready to use products, without the hassle of implementing and managing the application.

So, these companies can continue to do what they’ve been doing all along and still attract customers – host Exchange and Sharepoint on their servers, and build solutions on top of that and offer them to customers as services. Alternatively they can resell Microsoft’s hosted services by adding value added services on top of that, and attract a premium price. One example could be offering support for email on iPhone and Blackberry that stripped down hosted Exchange does not. Or a company could integrate all the components of Microsoft’s bundle – Sharepoint, Exchange, LiveMeeting and Office Communications, into a single seamless solution with a centralized console.

The Search for Truly “Complete” Solutions

Although with this announcement, Microsoft didn’t quite deliver what it seemed to offer, the need it sought to address is nonetheless very pertinent. The need for a truly end to end, integrated messaging, collaboration and web conferencing solution, with each component fitting seamlessly into the whole and communicating with every other component. Solutions which don’t require any hardware, downloads or maintenance and are ready to use from day one. Solutions which come at an affordable monthly subscription.

So, do end customers have to wait for a couple of years before somebody else takes up this challenge? The answer is a resounding “certainly not!”. Although Microsoft may make it seem like it was the first to serve this compelling need (not that it really did serve the need), it was for the precise reason of pressure from rival products that Microsoft took the “bundled hosting” plunge. Google for one offers many compelling alternatives to Microsoft’s Exchange and Sharepoint with Google Apps, Google Pages, Gmail et all. But even Google’s star products are piece meal, and it hasn’t so far come up with a truly integrated end to end solution. Moreover, it doesn’t have a web conferencing solution at all, which would be vital in a totally complete solution.

But there is a another category of solution providers, who may not be as big as Google and Microsoft, or get that kind of frenzied airtime, but they have for years offered very compelling solutions to small and mid sized businesses. Many of these solutions would put the biggies to shame, and are in intimate touch with the real needs of the small to mid sized business segment. To present my case, I shall discuss the web based application HyperOffice. HyperOffice has been operating in the “Exchange and SharePoint Alternative” domain for years, and they’ve built their solution bottom up, based on experience. It would not be wrong to say, that they’ve been doing for years what Microsoft promised to do just now, and did not do even that.

Now to assess HyperOffice on the basis of the parameters we have defined for a truly end to end solution.

Exchange Features

HyperOffice includes business email, shared contact management, shared calendars and shared task management. It also includes Outlook integration and can be used to power the Outlook accounts of your employees as if Exchange were running in the background, only that its not. Users can access their accounts on their desktops using Outlook or online using any Mac or PC browser and all information is automatically kept in synch. Moreover users can also access and synch their accounts from mobile devices like iPhone, Blackberry etc.

Sharepoint Features

As an alternative to Sharepoint, HyperOffice includes a publisher tool which can be used to set up dedicated intranet and extranet workspaces for employees, departments, partners or clients. The publisher allows for deep customization of the workspaces according to user needs. Users can finely manage the appearance, layout, pages, interlinking of these workspaces. In addition they can choose from a range of collaboration tools to add to each workspace – document management, calendars, address books, to do lists, task management, forums, IM, polls etc.

HyperOffice also includes a rich online document management tool. It allows for easy online storage and organization of all file types and allows people to collaborate on documents using features like versioning, notifications, locking, overwrite protection etc.

Web Conferencing

Keeping with growing travel prices and increasing openness of companies to web conferencing as a mode of communication, HyperOffice has recently introduced HyperMeeting, its web conferencing tool. It is as robust as any web conferencing solution, with the ability to conference with upto 125 participants, file distribution, presentations, application and desktop sharing, whiteboard etc.


The best thing about a solution like HyperOffice is that all parts fit perfectly into the whole. This makes sense, because even in a business, all parts are forever interacting with each other, and so it should be with a collaboration solution. Consider the following scenario – A web conference needs to be set up. Since it is a meeting, invites need to be sent out to all the participants. So an automatic invitation tool will be involved. The invitation tool will need to talk to address books so that the right recipients are selected. Moreover, to ensure that participants don’t have clashing schedules, calendars will need to be compared. Before the meeting is undertaken some documents may need to be distributed to the participants, and collaborated on. So the document management tool would be involved. The conference may relate to an important milestone in a project. So the project management tool would be involved. This is only one situation in which one can envision different parts of the system having to interact with each other; there may be a myriad of other such situations. The synergies that are to be had in such a system are tremendous.

In HyperOffice, different parts of the system come together simply, logically and effectively. It’s no wonder that it’s been nominated for many awards under the “design” category. The solution allows users to set up workspaces for individuals with tools like email, personal document libraries, address books, calendars, to do lists, links, reminders etc. On the second level workspaces can be set up for groups with looks like document management and collaboration, shared calendars, shared address books, group tasks, web conferencing, forums, polls, chat etc. This is a great example of the coming together of messaging, collaboration and web conferencing features.

Moreover, HyperOffice includes a myriad of other features which can only come after years of experience working with clients. These are the ability to integrate the solution with Outlook, mobile access for devices like iPhone and Blackberry, and the ability to manage documents and drag and drop upload documents directly from the desktop.

Another great aspect from an administration point of view is the ability to manage everything from a central console. All aspects of collaboration are contained within HyperOffice and users don’t have to look in different directions and learn a myriad of software for different uses.

Tailored for SMBs

Big names like Microsoft and Google always eye the bigger customers of the range of around 5000 seats because of the juicer profits to be gotten from those clients. So both the products and the services offered around these products take shape with that segment in mind. Smaller companies like HyperOffice, however have been developed specifically for the small to mid sized business segment, and refined through years of experience. The onus is on developing ready to use products with easy “push button” functionality.

HyperOffice just needs a signup and can be set up almost instantly. It is an end-user’s tool, as just about anybody can get on the system and publish information or use the tools. No technical expertise is required to implement or use it. Moreover, they also offer free training and support services to assist companies along the way. If a customer chooses, they can easily scale down the solution, and choose only a subset of the tools offered based on its needs and comfort level, rather than the entire suite.


In conclusion, although Microsoft has opened its hosted solutions to all, they still remain suitable for organizations which are largish if not large. Vendors could also resell Microsoft’s bundles by throwing in integration and management services, but then they will ask for a premium price and the low price tags won’t remain. Frankly, even in their hosted avatar, Microsoft tools are still not suitable for small businesses because they never were developed for this segment, and the effect will always be of trying to squeeze a big foot in a small shoe.

Clearly, the lesson for growing organizations is that although Microsoft and other big names have rather belatedly gotten on the “Small to medium sized business” bandwagon, one has to cut through the hype, and look in all directions for the best solution. And more often than not, the most compelling solutions will come from elsewhere.


Random Posts

bookmark bookmark bookmark bookmark bookmark bookmark bookmark bookmark bookmark bookmark bookmark bookmark

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URL

Leave a comment