Microsoft's Seismic Shift To SaaS

Microsoft Corp.'s channel partners finally got their first sustained look at Microsoft's SaaS strategy at last week's Worldwide Partner Conference. With that look, the frustration and anger that existed among some partners before the show has dissipated somewhat. But both Redmond, Wash.-based Microsoft and partners say the next steps will be key, as the software giant continues to hone its services message in order to soothe the channel's nerves about what clearly amounts to a seismic shift in their business model.

When Stephen Elop took the stage at Microsoft's Worldwide Partner Conference in Houston last week, the new head of the Microsoft Business Division faced the task of delivering news that he may have suspected would be disquieting to at least some of the 12,000 Microsoft partners in attendance. Although partners were about to hear about the commissions they'd receive for selling Microsoft-hosted services and the ability for them to receive recurring monthly revenue, Elop was also likely aware that some partners wouldn't be thrilled about the idea of giving up control over their customers to Microsoft.

Microsoft gives partners the choice and flexibility of deploying on-premise software, Microsoft-hosted services, or partner-hosted services. But later this year when Microsoft begins selling services through partners, it will take over control of billing, branding, pricing and service delivery.

Although Microsoft said this will help partners focus on value-added services, and isn't a sign that Microsoft plans to someday cut partners out of the loop, some partners who knew of these plans before the conference were steaming mad when they arrived at WPC. Which is why Microsoft went to great lengths at the event to demonstrate where the opportunities lie for partners in Software Plus Services.

Next: Who's On Board?