Reseller ME chats with Matt Haynes, Director, WW Channel Strategy for Hosted Cloud Services, Microsoft and Karim Kalaawi, Hosting Lead, Middle East and Africa Headquarters, Microsoft on the company’s hosting services.
How is the hosting business developing for the company?
MH: The business is definitely growing, in revenue up to 25 to 30 percent and the partner base is growing by 25 percent. Our business has moved out into the main stream of Microsoft and is now scaling through the field engines. So all the people who are selling other Microsoft products are now compensated on the Microsoft Services Provider License Agreement (SPLA), on our product services. So all these things sort of add up to a perfect storm of an explosion of the business.
Could you discuss the hosting services within Microsoft?
KK: Our service portfolio can be divided into around five broad categories. In infrastructure, we have an offering around infrastructure-as-a-service, usually known as Virtual Machine hosting. In this model, a person can acquire a virtual server for just few hundreds dirhams a month instead of thousands of dirhams. And he can provision that on an as-needed-basis and can decommission it when not needed.
In software-as-a-service model, productivity applications such as messaging, email, collaborations, work flows, portals, unified communications and business applications such as CRM or ERP can be provided.
The third category includes desktop-as-a-service. This is applicable when companies follow BYOD and want to still run business applications. This service will grant users access to applications just as if they were working on a full blown PC.
Next category is database-as-a-service, we have variations with those. And the last one is more specific with voice, which is not used much in the GCC area due to the highly regulated telecom market. But if you go outside this territory, for example, Turkey, South Africa or Morocco, you find that there is a significant requirement for unified communications-as-a-service.
MH: The hosting business has currently 25 thousand hosting partners who are under contract. It is the biggest business in the industry in terms of providing the hosters the ability to implement. These hosting partners are managed by 80 plus resellers worldwide. Our channel has 80 partners that include big companies that have a representation in different subsidiaries. There are 80 complete entities that are driving over a billion in revenue and growing at about 25 to 35 percent currently. We are going to add about 6000 new partners this year in the hosting business.
How best can hosting partners leverage these services from Microsoft?
MH: They have to set up their business, install their infrastructure and decide what applications they want to offer. And it doesn’t always have to be a Microsoft application, it could be somebody else’s application. What they absolutely need to do is to deploy the Windows server infrastructure, virtualise it with Hyper V and manage it with Systems centre. These three apects are crucial.
Could you discuss about your channel incentive strategy?
KK: We have for years rewarded our channel partners, more for maintaining the business and operational excellence. We are sort of moving that model in to more of a business development and infrastructure deployment market share and we will modify our channel and payouts to reflect and drive out those behavior. Although, it is a worldwide model, the goal would be to tweak it regionally. We are just getting to the point where we are changing it for the first time to drive the business further.
Do you face any regional challenges?
KK: The challenges we have are probably with the level of maturity of the end users. It is not the same level as we see in the other developed markets such as US or Western Europe. We still have challenges when we are talking about cloud adoption, security and data sovereignty, because those services are primarily targeting small and medium business. And the level of awareness and the cloud education is relatively low. Therefore, there is still a lot of education that needs to be done. This is probably one of the biggest hindrances to the wide scale adoption of hosted services within particular markets. So when we look at the Middle East and Africa territory, there are different levels of market acceptance and maturity. Markets such as South Africa is quite mature and is very similar in composition to other markets in Europe. However, in GCC, you would still see that there is some resistance to adoption of such services.
MH: You must remember that ours is a two-tier market, our customers are the hosters and the hosters’ customers are the end users. So they are the ones who are really worried about security, so it’s really coming upon on the hoster to take the value proposition from around security that our products talk about.
What would you say is the business focus for the next two years?
MH: The cloud. From a channel standpoint, we are working with our channel partners in what we are calling the cloud transformation business, because the cloud business requires more than just the transaction. There is a change in the business model, there is a change in the way you compensate your people and many channel partners will be unable to make this change. We have some channel partners to whom we refer to as born in the cloud, who came into the business with cloud and they are doing tremendously well because they understand what are the challenges and they are not trying to take the old business model and trying to force fit. I don’t mind telling you some of the largest channel partners in the world are the ones who are not going to be able to make this change.
KK: Regionally, we are following worldwide best practices. We want to learn from the markets that are ahead of us and try to replicate their success and avoid falling into the pitfalls that they might have. We don’t want to reinvent the wheel and want to escalate as much as possible so that we can be at par with other markets.
How do you see the future shaping out?
MH: We are going to triple the business in the next three years. Hosting business is massive and we are gearing up to scale. It is just exploding and we are scaling internally from an operations standpoint as well as scaling in our field and in our support areas. There is tremendous opportunity.