SaaS Key Theme at HostingCon

I just returned from my first HostingCon event. It was an interesting little show held at Navy Pier in Chicago, for those of us who didn’t get enough of the Windy City during NXTcomm.

As at NXTcomm, a lot of the talk at HostingCon centered around how service providers – in this case hosting companies – can climb the value chain to grow their margins and reduce churn. As xchange has reported on in the past, software as a service (SaaS) – which is expected to grow to $19.3 billion by 2011 according to Gartner – has become a key theme around which the hosting industry is coalescing.

Hosting companies got their start offering basic stuff like e-mail, hosting platforms for Web sites and, often, end-user tools and templates for Web site creation and management. But the industry sees that as a good jumping-off point to offer services that are considered of much higher value, such as bringing popular applications like CRM/customer service to the small and medium business market by making them more affordable through a shared, network-based platform – aka SaaS.

But the industry can go beyond the most popular software on a hosted basis to also get into more niche applications and vertically-targeted areas like dental software, notes Doug Johnson, marketing director for hosting at SWsoft, which sells virtualization and automation software. Today dentist offices that want to adopt or upgrade dentistry-related software have to spend something like $5,000 for the software, and then have to install it and manage it, he says. Instead, a hosting company could provide the software procurement and management on an outsourced basis through SaaS, which could be a pretty attractive prospect to dental practices, which are typically not interested in doing a lot of heavy lifting in the area of IT, he adds.

SWsoft offers Plesk, a control panel solution designed to simplify the management and administration of Web sites. Plesk is used by many hosting providers worldwide for shared, virtual and dedicated hosting. And now these providers want to use Plesk to offer more value-added applications, says Johnson, but independent software vendors (ISVs) have their own control panels. So, in an effort to help the hosting industry expand via SaaS, SWsoft has partnered with hosting company 1&1 to introduce what it calls the Application Packaging Standard (APS). APS is not an industry standard, as the name may imply, but rather “a grassroots effort” that defines specifications that provide ISVs with a unified, open platform to create "pluggable" applications that can be delivered by any service provider with minimal integration costs and effort.

Several ISVs at HostingCon 2007 put their support behind this initiative. CCMedia is planning to incorporate the APS standard into its WebNibbler product, which generates Web analytics reports to measure Web site traffic and help evaluate marketing campaign effectiveness. FreshBooks plans to use the APS standard to deploy the API for its FreshBooks application, an online invoicing and time tracking service. Roaring Penguin Software Inc.’s CanIt product – which stops junk e-mail, such as ads, fraud schemes, viruses and more, before it gets to the mail server – will incorporate the APS standard. ShopSite Inc., its electronic commerce software enables companies to establish an online store, including credit card payments, is currently packaging a version of the ShopSite program that will comply with the APS standard. And Smart Online Inc. says its entire suite of small business productivity applications for accounting, human resources, sales and more will conform with the APS standard.

Also at the HostingCon show, Microsoft Corp. announced its strategy for enabling hosting providers to be successful in the world of software plus services. The strategy includes providing the next-generation hosting platform, delivering applications ready for hosting, and driving growth through tight integration with Microsoft’s partner ecosystem.

Identifying and deploying new services is the critical next step for most hosting providers. Microsoft provides a suite of applications such as Microsoft CRM, Microsoft Exchange Server and the 40 off-the-shelf applications included within Windows SharePoint Services that can be easily converted into revenue-generating services. Microsoft also has announced several programs, including the SaaS Incubation Center Program and the SaaS On-Ramp Program, aimed at helping ISVs adopt the SaaS delivery model with business and technical guidance from an established hosting channel, and discounted licensing.

CCMedia www.ccmedia.com
FreshBooks www.freshbooks.com
Roaring Penguin Software Inc. www.roaringpenguin.com
Microsoft Corp. www.microsoft.com
ShopSite Inc. www.shopsite.com
Smart Online Inc. www.smartonline.com
SWsoft www.swsoft.com

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