Microsoft dominates CSP SaaS market

Microsoft Office 365 is becoming to telco SaaS what the Big Mac is to fast food.
 
That’s not a health warning, but a fact, based on a 38-country study* of 51 communication service providers’ business SaaS portfolios that I’ve just completed.
 
Microsoft powers an astonishing 51% of these CSPs’ productivity and collaboration offers. Want a SaaS equivalent to The Economist magazine’s Big Mac Index? Et voilà!
 
A tall order
 
CSPs hope Office 365 – viewed as well featured and from a trusted brand – will acclimatize enterprises to SaaS, trigger volume migration and, ultimately, enable top-line revenue growth.
 
Maybe it could all come true – if only CSPs had more to sell and less competition.
 
The term ‘SaaS marketplace’ sounds big and sexy, but it’s aspirational for now. The typical CSP works with no more than six business SaaS partners.
 
Utilitarianism rules: Portfolios are designed to benefit the widest horizontal base of employees.
Worryingly, most CSPs (based on their current portfolios) believe this to be a white-collar employee working on a PC in a traditional office. Really?
 
Empty calories
 
It will take more than a one-size-fits-all commodity SaaS strategy for CSPs to profit. According to Informa’s 2013 Industry Outlook survey – which polled more than 200 CSPs worldwide – LTE and cloud services lead top-line growth expectations.
 
Yet barely a third of CSPs bundle broadband (their core revenue stream) with SaaS as a standard offer in their official SaaS marketplaces.
 
Islands of SaaS also exist in siloed fiefdoms – like mobile app stores and M2M marketplaces – often marooned by incompatible service delivery platforms.
 
Meanwhile, CSPs’ competitors are multiplying. There’s Microsoft’s own Office 365 Marketplace, Amazon Web Services’ Marketplace, Rackspace’s Cloud Tools Marketplace, and the marketplaces of IT distributors Ingram Micro and Tech Data, to name a few.
 
 
A balanced diet
 
The latest gastronomic trend is foraging. It’s about finding goodness in the wild, on local land. I think this can work for CSPs too.
 
Start at Kilometer Zero. Replace the chanterelles with local SaaS. Get attuned to what small businesses – the primary target for business SaaS – really need. Develop menus that cater to large affinity groups.
 
The Big Mac may be a ‘communion wafer for consumption,’ but a healthy diet is all about balance.
 
(*Note: The Informa [email protected] Pricing Benchmark and accompanying report are now available on the Informa Telecoms & Media Intelligence Center.) 
 
Camille Mendler is a principal analyst and head of enterprise verticals at Informa Telecoms and Media. For more information, visit www.informatandm.com/

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