Host With The Most

Phase 2 has been providing applications such as Microsoft Exchange and Project Server, as well as its own computer-aided design and online meeting software, on a hosted basis for about two years. In April, the Honolulu-based company launched a reseller program through which solution providers can supplement their application offeringsand#8212;and thus expand their businessand#8212;using Phase 2's hosted services.

When faced with demands from customers for services they may not offer, solution providers generally have the choice of expanding their product offeringsand#8212;which means hiring more personnel and developing new skillsand#8212;or leaving new business on the table. Sometimes, it means even losing the client.

Phase 2's SharePartner reseller program offers solution providers an alternative way to expand into new businesses and technologies. "I don't want to be an expert in everything," says Joe McIlhone, president of Covaylence Communications Solutions Inc., a Honolulu-based solution provider whose core business is Internet access, WAN/LAN and data connectivity services. Covaylence uses Phase 2 to provide its customers with Microsoft Corp.'s SharePoint application.

Tapping into the company's hosted services also offers solution providers a path to move into Software-as-a-Service applications. "That's a relationship that lends itself to a low-churn model," said Phase 2 CEO Kevin Doherty.

Under a service provider license agreement with Redmond, Wash.-based Microsoft, Phase 2 offers hosted versions of Exchange, SharePoint, Project Server, Dynamics CRM and Office Communicator applications. Phase 2 also hosts its own ShareCAD Pro computer-aided development and ShareMeeting Web conferencing software. The company is developing on-demand time-keeping and medical billing applications it plans to debut later this year.

Under SharePartner, solution providers will handle sales to customers, develop their requirements and manage implementation and configuration work. Phase 2 doesn't charge for initial implementation of its application services, but partners can charge for custom development and workflow design services. Phase 2 provides the hosted application services, private-labeled for the solution provider.

Doherty said his company directly supports customers for its hosted applications or leaves front-line support to the solution provider, providing second- or third-tier support. Likewise, Phase 2 can bill the customer directly and provide channel partners with a percentage of the revenue. Or it can bill the solution provider for the services and let the reseller handle all financial transactions with the customer.

Doherty said Phase 2 offers resellers generous margins on its hosted servicesand#8212;a claim backed up by several partners, including Don Stroud, CEO of Stroud Technology Solutions LLC, Oak Brook, Ill.

Stroud's core business is assembling IT and voice networks for companies with 25 to 150 employees. The company recently began offering its customers SharePoint, Dynamics CRM and other Microsoft applications hosted by Phase 2. "The relationship has been very solid," Stroud said, praising the quality of Phase 2's engineers and the guidance the company has provided in how to sell applications.

Right now only about five percent of Phase 2's sales are through channel partners. But Doherty said he would like to see as much as 70 percent of Phase 2's sales made through channel partners because he wants to devote the company's resources to developing more applications.

Phase 2 hosts applications in its Honolulu data center. The company plans to build a second data center in Chicago and is considering installing centers in Europe and Asia, Doherty said. "We're getting and#91;customersand#93; in some crazy countries and we have to reach for a globe."