In case you missed the original blog about this session, I am bringing it back to the top.  As I speak with many partners and service providers trying to understand Microsoft's strategy with the online productivity space and what does it mean to them, I realize that you can't repeat the message enough.  I One thing is clear, email is a commodity offering now and all service providers are trying to understand how to best to navigate through this highly competitive marketplace. Check out this video to get a better understanding of Microsoft's Online Services offerings and our strategy and partnership opportunities.

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I just returned from Microsoft’s annual Worldwide Partner Conference. This year was the first year we had dedicated hosting provider and Telco tracks. Besides attending the great parties and talking to many of you, I spent most of my time speaking with press and analysts. Over a dozen of them. Mostly I covered what was in our press release and then we talked about the industry and where it was going. This is a great time to be in hosting. Small and Medium businesses are looking to consume IT as a service.  Hosters and Telcos have the datacenter, networks and expertise to provide it. They just need to be able to provide Enterprise quality IT services. This is where we come in. Microsoft has the software and services to provide enterprise IT services. We need the channel that will enable us to get to the SMB. That is where the hoster comes in.

Congratulations to Outsourcery, Hosting Partner of the Year!

John Zanni, general manager, Worldwide Hosting, Microsoft Communications Sector

About a year ago I heard that subscriber churn for service providers have been increasing at a steady rate of 5% per year with the current rate exceeding 20%. (Source: European Commission 2008, Wireless Intelligence 2008, A.T. Kearney analysis.).   This was interesting to me since I also was hearing from our Microsoft Exchange partners, that their churn was decreasing.  I wanted to learn more why our partners were telling us something opposite of the industry trend, and theorized that Microsoft Exchange’s business class email solutions might be causing stickiness and retention.  So I commissioned Edge Strategies to run a study to understand the impact of Business Class Email on Small Business broadband churn over a 3 year period to learn more.  There were some very interesting results, so we decided to share them with our partners this week (download full white paper).  Here are some of the key findings:

• Web mail users switch their broadband provider 37% above average
• Hosted Business Class Email users switch their broadband provider 31% below average
• SMBs switch broadband providers 17% for additional services such as Business Email
• POP/Webmail Users are more likely to switch providers due to broadband cost
• Hosted Business Class Email Service users are less likely to switch providers due to price vs. POP/Web mail.  They are more likely to switch based on Service Quality and higher Broadband speeds vs. POP/Webmail users.

I’ve highlighted individual Business email retention case studies before, but this is our first market study to quantify this.  See the following for previous churn/bundle discussions:

• Sticky Like Honey and Just as Yummy!
• Bundle Bundle if you can, or you might lose your customer to Deutschland-LAN 

- Alex Danyluk
 

I had the pleasure to be in Vienna last week for a small but focused hosting event of our largest service providers.   We dedicated an interactive workshop on go to market (GTM) learning’s from companies with Hosted OCS in market.  STAR, Outsourcery, T-Systems and InTechnology shared the most.  The themes I kept hearing were:

·         Hosted OCS has a shorter sales cycle than they expected.  Key reasons: it can be an add-on and not a replacement to customer existing communications.  Turn-up can be fast (24 hours with one provider), so you can trial it and get buy in quickly.

·         When leading with Hosted OCS you pull through the other Microsoft products: Exchange, SharePoint, and Dynamics CRM.  Partners thought they would lead with Exchange and up-sell, but it’s the other way around.  By demoing OCS within Outlook, SharePoint Sites and Dynamics CRM, the customer sees the value of OCS, and you potentially sell the full portfolio.

·         ARPU for the full Network and voice bundles can be $100/User/Month When OCS pulls in SharePoint, CRM, and Network services, the revenue adds up.

·         The key is to demo the product and discuss the benefits from the specific customer’s perspective.

·         Surprisingly, they are seeing strong larger customer interest with >500 users.  Originally thought interest would be lower due to do it yourself (DIY) of larger companies.

·         Trials need to have a clear duration and objective.  “Try taking away a company’s OCS once they have used it for 30 days – you may have a riot”.

·         Make sure your ROI discussions include all the Soft Benefits: time saved, and reduction in time to “whatever”.  Have the customer help quantify or validate these.

Thanks to all the partners that shared their experiences, and your awesome success with Hosted OCS.

Alex Danyluk, industry marketing director, Microsoft Communications Sector

After participating in the Hosted Exchange 2010 SP1 TAP we now have a solid grasp of some of the more important advances in the product that are of significant benefit to hosting partners. These are primarily support for native multi-tenancy provisioning and performance improvements.

Exchange 2010 SP1 Hosting (I add Hosting on the end to differentiate from the standard enterprise version) introduces a new multi-tenant model with accompanying PowerShell Cmdlets. In this new design each specific Exchange Object (such as an Address List) associated with an organization is stored in its own Configuration Unit within the Configuration Container is Active Directory. So address lists, for example, are clearly tied to an organization and isolated. There is no need for the extra security settings and complex pointers that we used in HMC to associate Exchange Objects with a tenant organization. User objects are then stored in a tenant specific OU. This is what makes the product "natively" multi-tenant and is an example of why the previous Hosted Messaging and Collaboration (HMC) provisioning engine was no longer needed for Exchange 2010 SP1 Hosting.

Another significant benefit is that the provisioning performance is much faster than with HMC, and also more efficient in terms of the amount of code needed to leverage the Cmdlets. This allows a lot of flexibility for ISVs to create solutions on top of this, especially filling the various gaps left from HMC, such as a reseller model and providing an API for Control Panels to leverage.

I consider it important to have this native multi-tenancy design and automation provided in the product so that it will be supported by Microsoft and also provide a predictable provisioning experience on Exchange 2010 regardless of what Control Panel a hosting partner maybe using. As a Systems Integrator, knowing what we’re getting into and having a consistent experience for provisioning across all our clients is an important benefit. It also opens the possibility that other products such as SharePoint 2010 and Systems Center Operations Manager may be able to leverage this tenant model so that we have one tenant model across the Microsoft hosting platform.

Now on to performance improvements. Firstly, there is about a 70% reduction in Input/Output Operations per Second (IOPS). This is important because historically with Exchange the only way to get acceptable levels of IOPS was to use many disks in a RAID stripe set, usually only possible with an expensive SAN. This then opens the possibility of getting adequate performance using single inexpensive Direct Attached Storage disk drives and replicating the databases to other mailbox servers to get fault tolerance. This storage approach is nicknamed JBOD – “Just a Bunch of Disks”.  There is a nice summary here: http://blogs.technet.com/b/ucedsg/archive/2009/05/11/what-is-new-with-exchange-2010-storage.aspx

In summary, the native multi-tenancy provisioning and performance improvements are a very significant advancement in Hosted Exchange, developed by the Exchange Product group in a single version of Exchange, and supported by Microsoft. These are some good foundations for hosting partners to move forward with as they plan for their next generation platform.

Thanks,

Steve Schwartz

President

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