The VAR Guy had plenty of SaaS questions for Microsoft’s BPOS (Business Productivity Online Suite) team on July 15. And Microsoft’s BPOS team replied to the rapid-fire inquiries with plenty of answers. Among the SaaS revelations: Microsoft claims early BPOS partners — which resell offerings like Exchange Online and SharePoint Online — have found ways to pocket about $167 per seat in revenue. Here’s how.
First, a little background. BPOS is Microsoft’s SaaS (software as a service) umbrella for Exchange, SharePoint, Office Communication Server and several other core Microsoft applications. Many VARs are exploring BPOS while attending this week’s Microsoft Worldwide Partner Conference (WPC09) in New Orleans.
At first glance, VARs and channel partners that promote BPOS applications to customers can earn an 18 percent referral fee (year one) and 6 percent for every year thereafter for the life of that BPOS customer engagement. Ironically, some Microsoft partners — such as Intermedia — say their own hosted applications give VARs better revenue and branding opportunities than Microsoft’s own BPOS offerings.
Microsoft’s BPOS Response
The VAR Guy asked Eron S. Kelly, senior director of Business Online Services Marketing, for some perspective. Kelly came armed to the conversation with plenty of data.
Kelly’s key point: VARs need to look beyond the initial BPOS percentage revenue opportunities. For the typical BPOS engagement, VARs have been generating per-seat fees of:
- $20 for partner record fees
- $46 in migration fees
- $66 in consulting fees
- $35 in managed services fees
Do some quick math and that’s $167 per seat in revenue opportunities going directly into a channel partner’s pocket. But are Kelly’s revenue figures real-world data points? Hmmm. We’ll see if they hold up as other MSPs and VARs report their early BPOS experiences.
Also of note: The VAR Guy believes most of the $167 per seat in revenue for the partner likely is a one-time fee rather than a recurring fee.
Impressive Data
To reinforce BPOS revenue opportunities, Kelly pointed to a PointBridge, a solution provider that has managed eight BPOS deals so far, spanning 5,200 seats and $642,000 in revenue. Kelly also points out that customized SharePoint Online applications represent lucrative revenue opportunities for VARs.
So far, more than 5,000 partners have registered to sell BPOS applications, er, services. And 100 new partners are signing up per week. Oh, and here’s one other interesting stat from Kelly: For Microsoft’s most recent fiscal year, 4 out of 5 BPOS seats sold involved partners rather than direct sales.
“We’ll continue to have a deliberate dependence on partners,” says Kelly. And yes, that includes companies like Intermedia — which actually competes with the BPOS suite.
“Intermedia is great example of power of choice we’re evangelizing,” says Kelly. “They can customize it and integrate it with different partner models. An Intermedia win is a Microsoft win.”
Friendly words in a highly competitive SaaS and hosted software market.
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Tags: Intermedia Hosted Exchange | Microsoft BPOS | Microsoft Business Productivity Online Suite | Microsoft Eron Kelly | Microsoft SaaS | Microsoft Sofware as a Service | Microsoft Worldwide Partner Conference 2009 | PointBridge | WPC09
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Sorry, but as I mentioned on your Facebook yesterday, I call pure infomercial bs on this. Microsoft Partners make 18% first year and far less after that on handing their client, their data and billing over to Microsoft.
All other revenues collected are unrelated to BOPS and can be associated with any other product or service. So to say that ___ Partners are making (imaginary number) it remarkably misleading.
-Vlad
Vlad: The VAR Guy keeps his comment area wide open for constructive criticism. But please note: The VAR Guy spoke with PointBridge for perspective and they had some upbeat reinforcement on Microsoft’s statements. And the revenues collected, in this case, were related to BPOS.
You raise some healthy debate, tho. And The VAR Guy welcomes it.
We have been reselling Hosted Exchange since 2001 and I have never known a partner who is earning big bucks from migration and consulting, and, our partners want to own the customer relationhip, not risk losing the recurring fees at the end of year one at the flick of a mouse, no no, thats not good business
Mark
Mark: Can you share any more about your business? The VAR Guy loves real world examples of what’s working — and what isn’t working — out in the market.
Var Guy is there a distribution play here?
Aut30: yes. Ingram Micro Seismic team assisting VARs with SaaS Exchange, Sharepoint…
Var Guy – any chance the PointBridge folks would share cost of sales and average close time for those 5,200 seats? Big migrations usually take big, long selling cycles. Would be interested what the average was and if they found the cost of that sale to be on par with onsite implementation. Could be a big swing in the value of that 642K.
Andrew: The VAR Guy will ping them… Thanks for the question(s).