Hosted SharePoint: The Next SaaS Commodity?

When RackSpace recently announced plans to offer hosted Microsoft SharePoint, it signaled both an opportunity and a warning sign for managed services providers. Is hosted SharePoint the next commodity SaaS service. Yes and no. Here’s why.

To understand where the SharePoint SaaS market is heading, it’s wise to look at the hosted Exchange Server market.

Two or three years ago, many first-mover MSPs were first starting to figure out their hosted Exchange Server strategies. Some MSPs built sophisticated infrastructures to host Exchange on their own. Others turned to white label experts like Intermedia. And more recently, some folks have embraced Microsoft’s own Business Productivity Online Suite (BPOS), which includes Exchange Online.

The net result: Roughly 67.7 percent of MSPmentor 100 survey participants say they now offer some form of hosted or SaaS email to their customers.

But when Microsoft cut BPOS prices in November 2009, it put the squeeze on small MSPs that hosted Exchange on their own without adding much value.

Similar Story with SharePoint?

Turn your attention to the SharePoint market and I believe the cycle is set to repeat itself — but in a slightly different way.

Already, 36 percent of MSPmentor 100 survey participants say they now offer hosted or SaaS SharePoint. Much like hosted Exchange, there essentially are three ways for MSPs to get into the SharePoint SaaS market.

Learning from the Exchange Server experience, I think few MSPs will spend time and money building out their own SharePoint infrastructures. Instead, MSPs that specialize in SharePoint should look at specific ISV (independent software vendor) options.

If you rewind to the Microsoft Worldwide Partner Conference (WPC) 2009, SharePoint ISVs dominated the trade show flow — demonstrating a range of collaboration applications that extend SharePoint. That ISV market should remain healthy for years to come, considering Microsoft now generates more than $1 billion in annual SharePoint licenses.

Quite a few MSPs are developing their hosted SharePoint strategies right now. Simply reselling the base application for a flat, per-user monthly fee will become a low-profit opportunity pretty quickly. Focus on writing or customizing extensions to hosted SharePoint, and you’ll have high-paying customers for life.