Where is the Software Plus Services play here? Not yet. But this is the beginning of the move towards Google adopting a ‘software plus services’ strategy. Google will soon realize there are some large solution providers out there who would like to customize and host their Google Apps themselves and offer it to their customers. Additionally, there will also be large mid-market and enterprise customers (which is where most of the IT money is spent) who would like to customize their apps, integrate them with their business processes, and even host Google Apps internally and manage it themselves.  Microsoft offers on-premise, channel hosted, and Microsoft hosted solutions for their applications; Google will follow suit soon – the only thing is that Google comes into the ring from the opposite side  (of Microsoft) . In summary, no IT vendor however big, can afford to ignore a segment of the market because of some religious opposition to a business model. As Microsoft and Google start pushing their software plus services strategy, smaller vendors will follow suit.

My recent comments on an MSPMentor post: “Will Managed Service Providers Back Microsoft Exchange Online, SharePoint Online” -are quite relevant in the context of this subject…

“I think it is inevitable that Microsoft takes this hybrid approach with the SaaS model. But the market is so big there is always room for VARs and MSPs to add    value and win customers. In our experience in the SMB market segment we have dealt with two types of SMBs, the one who has internal IT and the one who     outsources it to a local VAR or an MSP. The latter segment is where VARs and MSPs have to cater to by building relationships with customers and also by becoming a trusted advisor/CIO of these small businesses.

Finally, there is no point fighting the tide. Microsoft cannot afford to cede a market segment to a salesforce.com or Google etc. So they need to do something to capture the market segment which is directly consuming applications from the SaaS vendor. That does not mean there is no value VARs/MSPs can add. I strongly believe there is probably 50% of the SMB market segment who are not comfortable with consuming business applications directly from the SaaS vendor. They would go to their local MSP/VAR who would bring in additional value so that these SMBs can focus on their core business.”

I think the complexity of IT is such that it is impossible for a large vendor to cater to all types of businesses. There is a big segment of the market that does not want to figure things out on their own and rather focus on their core business. They would rather outsource it to a trusted MSP/VAR to figure everything out and deliver a solution they could use.

In my opinion, Google is coming around to the same conclusion. Watch this space!

The above post was written by Sekar Vembu of Vembu Technologies. Vembu Technologies is a backup software vendor whose product, StoreGrid, powers the online backup services of a large number of service providers across the globe. Besides remote backup, StoreGrid is also used for on premise backups of workstations and servers at various companies & universities.