Microsoft Says SMBs Moving To SaaS, Virtualization

Released Wednesday, Microsoft's survey of more than 600 Small Business Specialist partners in the U.S., U.K., Canada, France and Brazil, found that these partners anticipate a 20 percentage point increase this year in the number of SMBs that use SaaS.

Ross Brown, vice president of solution partners at Microsoft, says SaaS makes sense for SMBs in the current economy. "Most SMBs are cash-flow-financed instead of debt-financed, and the pay-as-you-go model lets them spend more money on service configuration than on capital costs," Brown said.

Brown says Microsoft is seeing "significant uptake" in its Business Productivity Online Services suite, which includes hosted versions of Exchange, SharePoint, Office Communications Server and LiveMeeting. From July to November 2008, more than 1,500 partners joined the Microsoft partner program for Online Services, and this community is growing at a rate of 100 partners a week, Brown said.

Microsoft partners are seeing ample services opportunities in migrating SMBs from legacy e-mail systems to hosted Exchange, according to Brown.

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But while SMBs are interested in SaaS, they still face certain obstacles in shifting their business operations to services. For example, many SMBs have line-of-business apps that are designed to run in client-server environments, such as those built on Access or SQL Server, said Dave Sobel, CEO of Evolve Technologies, a Fairfax, Va.-based Microsoft Gold partner.

"The moment a line-of-business application comes into the mix, they're back on-premise. And that happens most of the time," Sobel said.

Virtualization and IT consolidation were identified by fully half of survey participants as the most effective for cutting operating costs. But for SMBs, the cost savings of virtualization aren't just on the server, but also in application virtualization and streaming, Brown said.

"Application virtualization technology can help you deliver applications to older computers so that your hardware refresh can go slower," he said.

However, the biggest potential for Microsoft lies in getting its server virtualization offerings into the SMB space, which is the one part of the market where Microsoft doesn't trail VMware, Sobel said.

"Server virtualization is where the first opportunity lies, because SMBs haven't been virtualized in large numbers, and the field is still open," Sobel said.