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Microsoft attacks SaaS market

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Microsoft has announced a better version of a multi-tenant server software-as-a-service (SaaS) platform, to be used initially for e-mail and teamware (SharePoint), but probably expanding to other applications, such as Office, over time.
Delivery of the platform is planned for the fourth quarter of 2008. 

Microsoft already offers a dedicated server SaaS platform for companies with over 5 000 seats. This implementation is for organisations with under 5 000 seats.
Pricing has not been announced.
Gartner believes the SaaS model is in its infancy, but holds considerable appeal, particularly for small and midsize businesses (SMBs).
"This is because it offers fixed monthly fees, freedom from most operational management, elimination of upgrade responsibilities and, in some cases, lower costs," it says in a statement.
"The potential of the SaaS delivery model has had a significant impact on vendor dynamics, driving Cisco to acquire WebEx, Yahoo to buy Zimbra, Google to purchase Postini, Dell to buy MessageOne and SAP to invest heavily in its Business By Design platform.
"We believe the SaaS model will dramatically change the way businesses provision, operate and consume IT services during the next five years.
"Microsoft's SaaS investment is both an offensive move to capture operational revenue (in addition to the license fees it now collects), and a defensive measure to combat potential incursions from suppliers such as Google."
Gartner believes the challenges Microsoft faces are considerable.
"While it runs one of the largest public portal sites in the industry, providing large-scale SaaS services for business requires significant expertise in high availability, security, multi-tenant architectures, network topologies and problem resolution.
"Furthermore, Microsoft is retrofitting its existing software to the multi-tenant server model. It won't be until the next version of Exchange (due in 2011) that its core products are better architected to run in a multi-tenant SaaS model.
"Nonetheless, Microsoft's substantial market share in the e-mail and teamware market, particularly among SMBs, and the growing acceptance of SaaS business models create a significant opportunity for Microsoft. We believe that 20% of enterprise e-mail seats will use a SaaS provisioning model by 2012, compared with 1% in 2007."
Gartner suggests that companies develop a model for evaluating SaaS offerings in preparation for the expected heavy vendor participation in this area during the next several years.
It recommends that users pilot Microsoft's SaaS offering in 2008 if appropriate, but deploy it in production only after maturity is demonstrated, which is likely to take 12 to 18 months.