Microsoft Steps Up SaaS Efforts in Europe

Businesses in Europe could soon have more hosted software applications to choose from following a new program announced Monday by Microsoft.

The software maker is partnering with managed hosting companies in Europe to provide independent software vendors (ISVs) with services to help them adapt their applications and businesses to the software-as-a-service (SaaS) model. It will also help ISVs to find a hosting partner and provide them with discounts on licenses for some of its software for a limited time.

The program is open to ISVs enrolled in Microsoft’s Service Provider License Agreement, which lets them license Microsoft products on a monthly basis to provide hosted applications for their end customers.

The hosting partners, which include NTT Europe Online and 7global, will use Microsoft’s hosting platform to deliver the applications. The platform includes tools for setting up service-enabled applications and for tasks like user provisioning, performance monitoring and usage tracking.

The partnerships aren’t exclusive, meaning that NTT Europe will continue to offer other hosted applications on other platforms, such as Linux, said Robert Steggles, marketing director for NTT Europe Online.

It’s the latest effort by Microsoft to profit from the software-as-a-service model, which has been seen as a substantial threat to its applications business and which Microsoft is now gradually starting to embrace.

Pioneered by companies such as Salesforce.com, the hosted model can help end users reduce their software deployment costs by allowing them to outsource tasks like patching and upgrading applications. They often can also purchase software in smaller increments.

The new program will probably appeal most to smaller ISVs, some of whom are trying the software as a service model for the first time, Steggles said. The task is a significant one for vendors that have grown accustomed to selling software with one-off annual licenses.

"Changing their licensing model, their sales channel, their commission and their financial structure all to a monthly recurring model is quite a change," Steggles said.

To help with the transition, the hosting partners will set up "incubation centers" where ISVs can get two days of architectural design training and two days of business development training, provided jointly by Microsoft and the hosting partner.

The charge for the training will be "nominal," according to Steggles, because Microsoft and the hosting partner are subsidizing the services to attract new business.

NTT Europe is opening incubation centers in the United Kingdom and France this week. It also operates in Spain and Germany and will open incubation centers in those countries if there’s enough demand, Steggles said.