VARs Can Profit From Microsoft's Model

It is hard to miss a double-page IT advertisement that can be found in magazines ranging from Fortune to The Economist. The ad shows two serious fellows in dark suits conversing in front of several nondescript, but large, mainframes. The message is clear: Microsoft belongs in the data center. The less obvious conclusion is that Microsoft is going to try be the ASP (application service provider) industry leader.

Microsoft's ASP History
The media understates Microsoft's role in application hosting and instead emphasizes ASP as a delivery vehicle for Web-based applications. But Web forms generally are even less functional than DOS programs. They require hitting "submit" keys to enter data and "update" keys to display new information. Their lack of the dynamic scrolling and drill-down features of the Windows world limits their practicality for doing real work.

The reluctance of organizations to embrace Web-based applications has not helped the ASP industry. The press is full of stories of failed ASPs that leave their customers in the lurch. Even Microsoft's support has not been able to generate Wall Street confidence in the publicly traded ASP market. Microsoft's $70 million investment in ASP pioneers US Internetworking, FutureLink, and Interliant over the past 15 months, for instance, now appears to be worth around $1 million.

Microsoft's little loss, however, has hardly slowed down its commitment to the industry. The 2001 Microsoft Fusion Awards include an ASP category, and Microsoft has a new Gold ASP partner certification program. Its recent acquisition of ASP stalwart Great Plains will likely be a cornerstone of its software as a service strategy. Its .NET initiative stresses remote application delivery. And its new subscription model for renting applications indicates its determination to be a dominating presence in the ASP world.

The Effect On Solution Providers
I spent a lot of my years in business hoping that Microsoft would not impact my company. Our Novell platinum reseller status resulted in tremendous business until NT slowly began seducing away our prospects. Now Novell ranks a distant third place in network operating systems following Linux freeware.

We didn't fare much better as a Lotus Premium Partner. It seemed like Microsoft would never be able to catch up to Lotus Notes, but even IBM's backing could not halt the onslaught of Exchange.

Today, the ASP industry struggles may give solutions providers a false sense of security that they can afford to ignore application hosting. Microsoft's involvement indicates otherwise. Manufacturers, for instance, are increasingly using Microsoft Terminal services and Citrix MetaFrame to ASP-enable their applications. When a manufacturer offers its software via the ASP model, solutions providers lose out on the hardware and integration opportunities that the shrink-wrapped version would normally have provided.

Rather than hoping Windows-based application hosting will go away, solutions providers can capitalize on the trend by providing the service themselves. By becoming AIPs (application infrastructure providers), solutions providers form deep relationships with their clients, become an inextricable part of their IT strategies, and secure a recurring revenue stream.

Partnering With Microsoft
When we finally saw the light and decided to become a Microsoft Solutions Provider Partner, its representatives asked me to let them know if I had any problems or saw anything that they could do better. I had to chuckle because this attitude is so rare in our industry, particularly by manufacturers at the top of their game. They told me that this is the absolute culture at Microsoft. If you go into a meeting with only good news, you'll be thrown out. Microsoft executives want to hear problems so that they can fix them.

This is a wonderful way to run an organization and undoubtedly explains a lot about Microsoft's success. Whether or not solutions providers decide to embrace Microsoft technology in application hosting endeavors, one way to still profit is to simply adopt the Microsoft philosophy for running our own organizations.