It has only been a couple of months since Microsoft released details on what it will offer in its cloud based services, which include Windows Azure, .Net Services, SQL Services and Live Services. The actual impact of these services to the Internet based application community will not be evident for some time yet.

In the mean time Microsoft is calling for its current and new partners to get on board with Saas offerings. Microsoft is suggesting four ways that Independent software vendors(ISVs) can get involved in Saas or as they like to call it Software plus Services (S+S).

• Resell Microsoft Online Services
• Sell private label Microsoft based Saas services
• Resell Microsoft Dynamics CRM
• Resell Office Online

This is an interesting move. When Microsoft announced the offerings of Windows Azure, they also announced that they would host and manage the new generation of services, making them, for the first time, a direct competitor to the ISVs in the marketplace. Microsoft has reportedly facilitated this with Dell, using some of Dells large datacentres.

Microsoft is telling ISVs that they don’t need to worry about the impact Azure and the other Services might have on their core business, yet. Microsoft Online Services is for the most part not available yet and is not expected until mid to late 2009 at the earliest. In reality it will probably be 2010 before we start seeing any serious offerings.

Encouraging the selling of private label Microsoft based Saas services is a good ploy as well. ISVs will start offering Microsoft and companion Saas based services. Microsoft wins in two ways. Firstly, customers are using Microsoft products and paying for the privilege. Secondly, the business community is slowly introduced to the concept and practical use of Saas offerings. Once Microsoft has its S+S services available it will offer them directly to the customer, and try and cut out the ISVs.

At this point in time, and for some time to come, ISVs will be able to value add to online services by offering integration with other products and tools, like Blackberry, IPhone and other similar third party applications used heavily in corporate networks.

Microsoft is also really pushing partners to try and resell its Dynamics CRM package. Salesforce has pretty well owned this space for some time and Microsoft is now pushing back. The Microsoft Dynamics CRM is suitable for both small and large businesses.

The new range of Office Online is another way ISVs can push Microsoft products to customers that want a complete Saas offering. This service was launched to try and stop the growing foot hold Google Apps has made in the Saas application market. The Office Online offering includes Web hosting, up to 100 business-branded e-mail accounts, Project Manager, Document Manager, Contact Manager, as well as marketing and domain tools. The first year is free and then $14.95 per account a month to maintain the access. Two other levels exist, a premium service for $19.95 per account a month and an e-commerce option for $39.95 per account a month.

The reselling options mean that Microsoft will get the details of the customers, which then opens up the ISVs to the potential loss of customers to Microsoft in the future.

For the ISVs that want to get involved more closely with Microsoft in the S+S offerings there are a range of options. Microsoft is looking to expand its indirect Saas services through channel partners.

ISVs do not need to worry too much right now, but the future may hold a different story. In the short term the winner will be the Saas customers as the competition forces prices lower and improves the quality of services delivered.

But who can really tell what the medium term will bring. How do you think Microsoft will change the Saas marketplace? Is long term Saas operation really viable for businesses?