Office 365: Will Distributors Resell Microsoft’s Cloud Apps?
Jun. 15th, 2011 by The VAR Guy
Microsoft is set to launch the Office 365 cloud suite on June 28. Sure, VARs and MSPs can resell the cloud suite directly from Microsoft but those partners can’t control end-customer billing. With that challenge in mind The VAR Guy wonders: Will distributors like Ingram Micro, Tech Data and Synnex provide Office 365 customer billing capabilities to channel partners? Here’s the update and the speculation.
By now, most readers know Office 365 is the successor to Microsoft BPOS (Business Productivity Online Suite). It includes Exchange Online, SharePoint Online and a boatload of additional applications, with prices starting at $6 per user per month. VARs and MSPs can earn nominal recurring revenues reselling Office 365 but Microsoft — at least so far — will not permit channel partners to manage the end-customer billing process.
That’s where distributors enter the picture. During the recent TruMethods Schnizzfest conference, at least one expert in the audience said Synnex will offer Office 365 end-customer billing capabilities to channel partners. The VAR Guy is checking in with Synnex, Ingram Micro and Tech Data to see if any — or all — of the distributors plan to offer Office 365, and how end-customer billing will be managed.
Meanwhile, keep a close eye on both Parallels and Jamcracker. Here’s why:
- Parallels provides the SaaS foundation for a Tech Data cloud deployment in Europe. And at least one U.S.-based distributor is about to use Parallels for a similar SaaS initiative, The VAR Guy has learned. Moreover, Parallels is working with Microsoft on so-called Office 365 syndication strategies. The idea is for major service providers — perhaps distributors? — to use Parallels as a means to fetch Office 365 services from Microsoft’s data centers. As part of the Microsoft syndication strategy, The VAR Guy believes service providers will be able to offer Office 365 billing capabilities.
- Jamcracker is a veteran of the ASP (application service provider) era. The company has been busy reinventing itself, and Jamcracker now serves as the foundation for Ingram Micro Cloud Marketplace, a procurement system that will allow VARs and MSPs to select from numerous SaaS applications, set prices and manage end-customer billing. Just a hunch but The VAR Guy believes the Ingram Micro Cloud Marketplace will eventually offer Office 365 in some format.
Admittedly, The VAR Guy is yet to hear from Ingram Micro, Tech Data, Synnex and other distributors regarding their Office 365 strategies. Ingram Micro VP of Managed Services and Cloud Computing Renee Bergeron has previously stated that Ingram will offer Office 365. In what capacity? The VAR Guy is checking…
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Posted In: Cloud Computing | IT Distribution | Partner Programs
Tags: Ingram Micro | Office 365 | Parallels | Renee Bergeron | Schnizzfest | Synnex | Tech Data
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Tags: Ingram Micro | Office 365 | Parallels | Renee Bergeron | Schnizzfest | Synnex | Tech Data
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I don’t think there’s any question — they will because they’ll have to. O365, and more importantly the marketing muscle MSFT is doing around it, will drive a lot of end-user demand from SMBs, so channels need to be able to offer it or they risk losing their customers to MSFT direct.
I also believe O365 will be the next wave of public cloud adoption in large enterprises. Why? Because as their on-premise Exchange 2007 licenses start getting long in the tooth, many will decide to outsource to O365 vs. incurring the expense of doing an on-site license upgrade and migration.
Steve: Agreed… some distributors will resell Office 365. And you certainly have a vested interest in that happening since Ingram apparently is leveraging Jamcracker for its cloud platform. (Congrats on that alleged win, by the way. It’s a big, strategic bet by Ingram.)
But your point about Exchange 2007 getting long in the tooth also comes with its set of cloud challenges. During the Microsoft BPOS days, Microsoft failed to prove that it could scale Exchange 2010 broadly and reliably… forcing Microsoft to stick with Exchange 2007 as the SaaS service for the vast majority of customers.
Before customers shift their on-premise Exchange 2007 to Microsoft’s cloud (Office 365/Exchange Online using the Exchange 2010 engine), Microsoft must prove that it can reliably scale Exchange 2010 to the cloud masses. The VAR Guy will be watching to see how that plays out.
-TVG
Good points VAR Guy, however I can say that one of our partners who has been distributing BPOS since 2009 is doing very well with it. They are a telco who has an exclusive syndication agreement with MSFT for businesses with 100 seats or below in their geography. While they did get off to a slow start and there were some kinks that had to be worked out with BPOS, they are now growing their month to month BPOS sales by ~15-18%, plus in the process they’ve signed up several hundred VARs that they previously did not have relationships with. And as of yesterday our partner is selling O365 too and has already made some sales.
Part of why they’re successful, however, is that they are not solely dependent on selling BPOS because they’re also offering several dozen other cloud services from their marketplace / catalog. So one lesson learned is not to rely only on selling MSFT, but rather offer your customers some breadth, depth and choice.
As we all know, it’s not an uncommon story for MSFT to do several releases of any new offering to get it right, but based on what we’re seeing they’ve made really good progress with BPOS and O365 appears to be a great service.
btw, we don’t have a vested interest in whether any of our partners sells O365 or not — we’re agnostic and always recommend they sell what makes sense for them. We just want them to use our platform to enable it!
thx,
steve
Steve: The VAR Guy thanks you for the additional insights and the background info on that Telco. Also, your point about not having a vested interest in Office 365 is understood. Jamcracker certainly has a vested interest in cloud and SaaS activations though perhaps not specific platforms like O365. Understood and thanks for the dialog.
-TVG