Microsoft's Managed Services Play Puzzles Partners

At NXTcomm 2007 in Chicago this week, Microsoft is talking up the benefits of its Microsoft Solution for Hosted Messaging and Collaboration, Microsoft Solution for Managed PC, and Hosted Microsoft Dynamics for CRM, all of which the vendor is selling directly to about half a dozen enterprise customers.

Hosted Messaging and Collaboration is aimed at SMBs and consists of Exchange 2007, SharePoint, and Office Live Communications Server 2005 services. Microsoft Solution for Managed PC lets broadband service providers offer remotely managed PCs to consumers and small businesses.

Microsoft hasn't done enough to explain to partners the strategy behind its direct managed services play and whether it will encroach on its hosting partners' turf, said a source who requested anonymity.

"It does look like competition. Microsoft needs to inform the channel community of their plans for managed services, and spell out where we're going to cooperate and where we're going to compete," said the source.

Microsoft couldn't be reached for comment.

Tracy Butler, president of Acropolis Technology Group, a Wood River, Ill.-based solution provider, expects Microsoft to clarify issues around managed services and its Windows Live and Office Live software-as-a-service platforms next month at its annual worldwide partner conference in Denver.

"It's always something to think about when customers can buy software-as-a-service and renew it online, and we obviously want to keep an eye on that," said Butler.

However, "Microsoft has always done a good job with partners in telegraphing their intentions well in advance so that we have time to adjust," Butler noted.

Jerry Weinstock, President and CEO at Internet Business Initiatives, a Microsoft CRM partner in Lenexa, Kans., doesn't expect software-as-a-service to negatively affect his business.

The 'Titan' release of Microsoft Dynamics CRM, which will be available through the on-demand CRM Live service, is slated for release in Q3, with on-premise and partner-hosted versions launching in Q4.

"I supposed it's possible that companies could sign up for CRM Live and partners would be cut out of the action, but it's likely those people never would have been able to engage a CRM partner anyway due to the size of the application," said Weinstock.

"I think they do intend to take care of their partners. If we sign up an end user to CRM Live, they'll give us credit. Or, if someone signs up with CRM Live and we start working with them and they sign up for more licenses, then we'll get some credit," said Weinstock.

However, partners can't stay in business just by selling CRM licenses -- they also rely on professional services and the certified partner payments they receive from Microsoft, according to Weinstock.

"I won't worry about CRM Live until Microsoft comes out with a program that makes me worry," he said.