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Executive Summary

To have a complete understanding of the opportunities and challenges the cloud era poses for resellers, MSPs and the Channel in general, it makes sense to study multiple concurrent forces at play in the IT landscape which are driving change.  Moreover, this whitepaper highlights the Channel opportunities in the specific area of cloud based messaging and collaboration software.  It seeks to answer the key questions of – What is the role of the Channel in the cloud era? Why cloud messaging and collaboration? Why now?

The model of software delivery is in the midst of transition from traditional on premise server based software to software deployed over the internet.  This is in interplay with the emergence of new mobile technologies; a business environment where companies have to work in a distributed network of teams, partners and clients; and changed end user needs and expectations.

All these forces are coming together, and impacting traditional relationships between vendors, business users and the Channel. But one thing is for sure – the Channel remains as relevant as ever. The reason quite simply is, end users still want to be served through the Channel, and continue playing their roles of trusted advisors. The whitepaper studies these multiple forces of change, before going on to the specific question of – how does this all impact you – the VAR or MSP? Then it goes on to the unique Channel opportunities and new revenue streams in cloud messaging and collaboration. Finally, you learn about the vendor landscape in cloud messaging and collaboration, and how partnering with HyperOffice offers you some exclusive advantages.

IT Market Trends

Multiple forces of change are underway in the IT Market, profoundly impacting all players, including customers, vendors and the Channel.

Software will never be the same

The closing years of the first decade of the 21st century have seen a sea change in how companies approach, procure and manage business software. Traditional on-premise and server based software, known to be complex and expensive, has started to lose favor in the face of recessionary pressures. Accessing IT infrastructure, software, and data remotely over the web is now a requirement in modern business environments, which increasingly demands flexibility and working in a wider network of customers, suppliers, vendors, partners and regulators. “Disruptive”, “Techtonic shift”, “fundamental structural shift” are some of the phrases being used to describe this phenomena.

After gathering momentum over the last 5 years, the “cloud” and “software-as-a-service” are now more than mere buzzwords, witnessing massive adoption from all sectors of the economy, particularly the small and medium business segment. In a recent report, IDC predicts that over 2010-2014, SaaS will grow six times faster than traditional packaged software, reaching over $40 billion in revenues by 2014.

In contrast, perpetual license software fell $7 billion in 2009. Goldman Sachs Feb’10 study strongly titled “Techtonics: Unstoppable shift to SaaS continues” found that 58% of respondents always consider a SaaS option when making an application purchase decision. A total of 39% prefer an SaaS option, if available.

This is causing a fundamental structural shift, as evidenced by the fact that IT departments and software giants like Microsoft, IBM, SAP and Oracle are scrambling to incorporate the cloud into their strategy.

If the actions of the biggest global software vendor are anything to go by, Microsoft recently put its entire weight behind the launch of cloud-based Office 365, even at the cost of potentially cannibalizing its on-premise software revenue streams. CEO Steve Ballmer further underlined this by revealing that 70% of Microsoft’s 40,000 employees are working on cloud related efforts – a number that may increase to 90% in 2011.

SMBs Dig SaaS

Of all segments, SMBs have been impacted the most profoundly by software -as-a-service. SaaS fundamentally changes the “rules of the game” where SMBs now have access to the same expensive technologies as enterprises, without owning them, but simply paying for them according to use. This is similar to leasing a home, as opposed to being the owner. It is for these benefits of cost savings, flexibility and minimal lock in that SMBs have been most attracted to SaaS. And it is in no small measure due to the adoption and rigorous testing by small and medium sized businesses that SaaS has gone mainstream today across all sectors.

recent study by AMI Partners found that 12% of small businesses and 24% of medium businesses are already using SaaS. Going forward over half of US SMBs are looking at SaaS as a potential solution. AMI expects the global SMB cloud-related spending to climb to a whopping $94 billion by 2014. Another study by Sandhill found that SMBs are twice as likely as large enterprises to move their core business-critical services to the cloud. SaaS has been called a “no-brainer” for SMBs not least for the substantial cost savings. The reasons are: –

1. Cost

Arguably on the wane now, the recession has exerted tremendous pressure on SMBs to cut corners. This, along with the overall promise of cost savings, both in the short and long term, has been the main driver of SaaS adoption amongst SMBs. SaaS eliminates the ownership costs of hardware, software licenses and implementation, instead renting out software as a “service” over the internet. Sandhill found that over a 5-7 year time horizon, SaaS often turns out to be cheaper by 25-50% than on premise software.

Another major disincentive for SMBs is the fact that 60-90% of the total costs of on premise software on hardware, licenses and consultants are to be borne up-front in the first three years. Not to forget the cost of upgrading every few years and the associated costs of integration and implementation. SaaS, in contrast, offers a flat cost curve – its costs evenly spread out over the application’s life.

 2. Time to Value

Typically, a SaaS solution up and running in a matter of days or weeks, rather than months, as with traditional on-premise software.  As a consequence, SMBs can begin to realize the business benefits of the software solution earlier, which means the ROI is significantly better than on-premise software.

3. Levelling the Playing Field

SaaS allows SMBs access to powerful and expensive software technology previously available only to large enterprises. This robs enterprises of their traditional competitive advantage and allows SMBs to compete in new and innovative ways.

4. Simpler

The SaaS revolution has run parallel with the web 2.0 revolution, and many of the best characteristics of consumer oriented web 2.0 technologies have found their way into business SaaS solutions. The rich and intuitive web interfaces of SaaS solutions are end user focused, often requiring little or no IT intermediation to implement and use. This is ideal for SMBs which have small or no IT departments, and increases productivity as end users and subject matter experts have more control over technology.

5. Lower Risk

SaaS solutions pose a lower risk for SMBs, because there is no lock in of initial capital expenditure like on premise software. Companies are freer to move to alternate solutions if the current one is found not to be the best fit.

6. Flexibility

SaaS solutions are accessible over the Internet, allowing employees to access company systems and data outside the confines of the company network, when they may be travelling or working from home. Moreover, SaaS has also straddled the mobility revolution, which gained ground at the same time as SaaS. Most SaaS applications are compatible with and accessible from powerful new mobile devices.

7. Continuous Innovation

Upgrades are continuous in SaaS, and users  have ongoing access to new functionality in tune with the changing business and technological landscape, rather than waiting for the typical 2-3 year upgrade cycle of on premise software.  Since SaaS vendors have access to application usage data as the SaaS solution runs on their servers, they can use data on user behavior to innovate and upgrade their product. Since SaaS solutions are not a one-time sell, but an ongoing relationship, they tie users and vendors in a “community of interest”, where everyone benefits from developing the solution – the vendors in terms of continued patronage from the users, and the users in terms of technology.

8. Focus

Technology has never been a core strength of most SMBs. The ability to outsource the IT burden through SaaS allows them to focus on business and strategic strengths.

Growth and convergence of communication and collaboration

Messaging/Email is universal across industries and sectors, a bare minimum technological requirement, and one of the first to be implemented in almost any organization. This popularity is the reason that it was one of the first areas to gain credence as a cloud based solution. There is a groundswell of SMB customers who are unhappy with the cost and effort of supporting on premise email servers like Microsoft Exchange in their organizations. Since it is a commoditized application, requiring little customization, and hosted email offers significant cost savings, email is ideal for delivery over the cloud.

Google Apps has the credit of validating cloud email and making it mainstream. This forced Microsoft and IBM, the heavyweights in on premise messaging software to introduce cloud versions of their offerings.

In contrast to communication, which allows people to transmit information, collaboration technology is a set of tools which allows people to work together on information. Some examples of these tools are document management, project management, workspaces, or wikis. It is no surprise that collaboration is another SaaS application area witnessing great growth, since the economy is increasingly information driven, and every company has to work in a wider network of distributed employees, customers, partners, vendors, and suppliers.

It may be noted that collaboration is one of the key pillars of SaaS, or “embedded in the DNA of SaaS”, since the basic premise of both collaboration and SaaS is essentially the same – multiple people distributed over locations contributing to the same system using the internet.

The Inevitable Convergence

It is no fluke that cloud communication (or email/messaging) and collaboration are being spoken of in the same breath, especially in the last year. The SMB Group identifies the continued convergence of communication and collaboration suites as one of the main technology trends in 2011. Customers are no longer content with vanilla email systems, but and software vendors have woken up to the close connection between communication and collaboration technologies and the benefits of integrating them in a single suite. All the major vendors in the market are offering a combination of email and collaboration technologies to a greater or lesser extent.

SMB Pain Points

Against the backdrop of the larger trends afoot in the IT market, vendors will need to deal with a number of universal SMB business needs at the operational level. These are needs workers face on a day to day basis, working in their network of colleagues, bosses, clients and partners. These are often the difference between performing ones job productively or not, or meeting a deadline and clinching a deal.  And these themes are common across industries. It is in successfully dealing with one or more of these issues that vendors will find success. These universal needs are as follows:-

Email .Every company needs a customized business email system to enable interaction between employees and outsiders. It shall not suffice to have a vanilla email system. SMBs will be looking for hosted systems with offer them web access, and offer them integrated collaboration features over and beyond email.

Mobile/Push Email. The proliferation of powerful and internet friendly mobile devices like BlackBerry, iPhone and Android have lead employees to see their mobile devices as business tools. They want to have access to their business email, schedules, documents and other information even while they’re travelling or at a client site. While mobile internet usage is expected to surpass desktop internet usage in the years to come, users spend a majority of their mobile internet time on email.

However, most push messaging solutions like MS Exchange and BlackBerry Enterprise Server are expensive, or work only with one or a limited set of devices. With limited budgets and a workforce which brings a large and ever increasing array of mobile devices, SMBs are looking for low cost mobile messaging solutions which are independent of mobile device/platform.

Document Sharing. Working together on documents is at the heart of what most knowledge workers do during their workday. With collaborators increasingly situated in remote office locations, separate countries, at home or on the road, or consisting of customers, partners and vendors in addition to colleagues; companies need a system to organize and secure company documents, and enable the collaboration process.

Exchange and SharePoint Alternatives. Many SMBs are stuck with Exchange and SharePoint implementations to serve their messaging and collaboration needs, sapping them of resources, for want of dependable alternatives in earlier years. The mismatch is understandable, since Microsoft products have been developed and priced for enterprise customers. It is no wonder then that SMBs find the features to be overkill, the interfaces complicated and hard to garner adoption for, and the thousands of dollars’ costs of hosting and implementation to be crushing.  But now that the cloud offers an array of inexpensive, simple and robust systems, SMBs are looking for alternatives which offer them the same functionality.

Calendar Sharing. Knowledge workers need the ability to organize packed schedules, and keep on top of important appointments. They also need to coordinate and share schedules with colleagues, bosses, clients and partners spread across geographies and time zones.

Project Management. Modern managers need to work on projects which consist of members inside their organization and outside, working across locations in different shifts and time zones. It is not viable to coordinate project and status meetings with everyone for every task and project. It is often enough to just have an at-a-glance look at how the project is going, Therefore managers need a system to keep on top of multiple projects, assign responsibilities, attach resources, set deadlines and priorities. A system which gives them a quick view of where different projects stand, and allows them to get updates and notifications of progress as it happens, as they drive each project to its conclusion.

Intranets. Intranets have been a popular business solution for more than a decade now, especially for mid sized and large businesses. They serve a number of important purposes – two way corporate communications, motivation, giving employees easy access to important information and documents, managing workflows, or housing employee communities and team tools. Intranets help organize this information around teams, departments and divisions.

In a world where teams may consist of Americans, Asians or Europeans who will likely never meet, intranets also help in motivating members and garner a sense of camaraderie. Members have conversations in intranet discussion forums, find out more about each other through profile pages, or keep updated with news feeds.

What does it all mean for you – the VAR and MSP?

The channel has always been an essential cog in the IT eco-system that puts products and solutions in the hands of the customers. The emergence of SaaS and the Cloud has lead to fears amongst the Channel of being cut out in face of decreased relevance of traditional channel roles and revenue streams such as system installation, integration, customization and maintenance. This besides losing their percentage on licenses for physical distribution, which disappears altogether.

Indeed, in the earlier years of SaaS, vendors did try the direct to market approach. But as vendors and channel partners have discovered, the channel remains a valuable and trusted advisory to educate and encourage SMBs in adopting emerging technologies including SaaS. The primary reason for this is that consumers simply want to be served by the Channel. A recent CompTia survey found that more than half of end users want to make their purchases from a third-party cloud services provider, defined as a value-added reseller, solution provider or other channel organization.

This is understandable. Channel partners are the traditional source of business software for customers, have deep relationships with end users in their local markets, and are trusted advisors. In the era of on premise software, customers have depended on the channel to analyze their  business problems, map them to the available IT technology, and hold their hands though the entire process of implementation and maintenance.

Customers want channel partners to carry forward their earlier roles in the era of SaaS to minimize their risk. It is for this reason that many SaaS vendors have incorporated a channel strategy. For example, Google recently launched its Google Marketplace, and Microsoft’s major thrust for Microsoft BPOS has been through its partner network.

Backup, CRM and VOIP were early SaaS areas in which channel partners ventured and found success – SalesForce, Fonality, Introis.  But as the breadth of SaaS widens and starts to encompass almost every area of software, and new leading areas of SaaS emerge, channel partners are starting to venture into SaaS collaboration, email, document management etc.  A recent Forrester Research survey found that a quarter of channel partners say they are already reselling SaaS, and a further 30% have plans to do so. Are you one of them?

Business benefits of SaaS for VARs and MSPs

As SaaS crossed its tipping point in 2009, channel partners will find that reselling SaaS makes sense from a strategic standpoint. End customer demand for SaaS is sizeable, and as SaaS is increasingly sold through the Channel, channel partners would want to be on the leading edge of this wave, and develop new competencies. Apart from this, there are a range of incentives for SaaS channel partners as follows:-

Build recurring revenue stream. Since SaaS is based on a subscription model, channel partners get recurring revenues for as long as the customer relationship exists, rather than the one-time margin on packaged software. This is cash flow friendly, and leads to a higher aggregate revenue the longer the relationship lasts.

Get into hot market with minimal investment. The SaaS model does not require channel partners to maintain an inventory, or set up servers. Partners can enter the red hot SaaS market will zero capex costs.

Diversify offerings in a changing market, and offer clients choice. As many studies find, most SMBs will prefer a hybrid model rather than pure cloud or pure on-premise IT. Similarly, it makes sense for channel partners to diversify their offerings to include both packaged and cloud based software. In a market where both on premise and SaaS applications exist in every area, channel partners may also give clients choice by offering both.

Open horizontal and vertical cross selling opportunities.  As established by numerous studies quoted above, communication and collaboration are likely to be the biggest areas of SaaS uptake.  The reason is the universality of these needs across organizations. Partners will find cloud communication and collaboration solutions a relatively easy entry point into organizations, which they can leverage to cross sell further solutions or services.

It is like a salesman’s foot-in-the-door – once you demonstrate a quick win which is easy to quantify and illustrate as a smart decision, you will be the person they go to for accounting-in-the-cloud with NetSuite, or backup with Intronis, etc, as the cloud builds more acceptance.  Cross selling opportunities in a cloud world abound with solutions and software like backup, security, customization or consultation. With industry specific SaaS solutions available for every domain, other cross-sell opportunities also arise like cloud based financial software for finance companies, property management software to realty companies and so on.

From break-fix to strategic services. Packaged software typically requires a lot of menial maintenance effort involving numerous onsite visits. Since SaaS solutions require no on-premise setup,  customers are largely self-reliant after the first month.

Resellers stand to gain in two ways from this. Firstly, resellers stand to reduce costs of numerous on site visits, and serve a larger number of customers.  Secondly, the nature of value added services also shifts from low-value, low-margin services, such as hardware and software installs, upgrades, patching, database tuning, etc to typically higher margin strategic services. Some examples are:-

Change Management. Shifting to SaaS entails major change for organizations – integration, data migration, training etc –  which the partner can help with.

Business Process Reengineering. Reengineering and automation of business process around the SaaS application.

Customization. SaaS applications will invariably require customization according to processes and needs, which end users may prefer to handle through channel partners.

The Options. 8 reasons HyperOffice is the right choice.

Once you have decided to take the SaaS communication and collaboration plunge, the next decision is the product to place your bets on to maximize your revenue and your customer’s ROI.

Decision Criteria

The criteria are:-

1. Earning Potential. What primary, secondary and cross sell revenue opportunities does the SaaS solution offer? For example, implementation, setup, training, customization and consultation.

2. White Labeling. Can you white label the solution? Will you be building your own brand or that of the SaaS vendor?

3. Who Owns Billing? Channel partners which want to retain ownership of their customers would want the ability of invoice and bill the customers. This enables a range of cross-selling, up-selling, and product and service bundling opportunities to help partners grow their customer relationships.

4. Vendor Stability. How long has the vendor been in the market? What is the vendor’s market standing?

5. Product Features. How robust, comprehensive and well integrated are the features?

6. How crowded is the market?
 Are lots of other channel partners promoting the same product, creating competition amongst channel companies?

Comparison Matrix

Based on the above criteria, we have created a comparison of Google Apps, and Microsoft Office 365 (or BPOS), two of the most prominent solutions in the integrated cloud communication and collaboration market, with HyperOffice.

 Why HyperOffice – Top 8 reasons

HyperOffice brings you the following key benefits.

1. Go with Experience and Stability. HyperOffice is one of the pioneers in the integrated cloud communication and collaboration market since 1998, and widely respected and recognised. This is a market which Google only entered in 2007, and Microsoft in 2009. Our communication and collaboration solutions are our sole focus, and we have served over 300,000 SMB users over 10 successful years in the market.

2. Robust, Fully Integrated Features. HyperOffice solutions are loved by users and vetted by experts. Our HyperOffice Collaboration Suite has been built ground up based on real experience, with a laser focus on SMB needs. Google and Microsoft solutions have a rifle approach where they claim to serve all segments with the same solutions, while in-fact the lucrative enterprise market is where they gain the most.

HyperOffice has one of the most comprehensive feature sets in the market, based on continuous feedback from our SMB customers. All of HyperOffice’s features are fully integrated at the data level, unlike Google Apps and Microsoft BPOS, whose individual components are also stand alone products.

Google evangelizes the “add-on” approach, where modules like project management missing in Google Apps can be found its “Marketplace”, and plugged into Google Apps. However, these modules offer only a very superficial degree of integration, most often merely a unified login. Resellers would be wary of committing their customers to a loosely coupled system consisting of Google Apps and unverified third party solutions with their own agenda.

3. White Labeling. When you invest in marketing, and bring new customers to Google or Microsoft, you build their brand rather than your own, since they don’t allow white labeling.

You can leverage HyperOffice’s features, technology and other resources, under your own brand name. And every dollar you spend on marketing builds your brand, not ours.

4. Me-too or Differentiation? Google Apps has over 2000 partners for Google Apps, while Microsoft Office 365/BPOS has over 7000. When potentially thousands of resellers are presenting solutions from the same vendors, and those vendors set the price point, how do you differentiate yourself?

At HyperOffice, we have less than 50 carefully selected partners who are fully aligned with us. Plus, with greater control on branding and pricing, you can differentiate yourself rather than being another drop in the Google and Microsoft ocean.

5. Greater Margins. With HyperOffice, you can earn up to $65 per user per year, or 55% over the base price. Google Apps and Microsoft Office 365/BPOS offer you only 10% and 12% (6% after first year) respectively.

6. Control Billing and Prices. With HyperOffice, you continue to own your customers by handling the entire customer life cycle from sales to support, billing and collection. You also have the flexibility of choosing the sale price point.

7. Marketing and Sales Support. Leverage the marketing and sales expertise we have gained over 10 years. Use our marketing resources, whitepapers, presentations, email templates, videos and more.

8. Training. Get in-depth training on using and implementing HyperOffice solutions through our live webinars.

Talking hard numbers. How you make money.

HyperOffice offers you a number possible revenue generation streams from licensing, value added services, and cross-sell and up-sell opportunities. Specifically, you can earn from the following:-

1. Recurring license revenue. You can earn a 55% margin on HyperOffice’s base price, or $65 per user per year.

2. Implementation and Data Migration. You can charge for value added services such as implementing HyperOffice for the client and getting it up and running in turn key shape – setting up groups, adding members, implementing policy controls and permissions, designing intranet pages, getting mobility up and running etc. .

Shifting to HyperOffice from a legacy messaging and collaboration platform will invariably involve substantial migration of data in terms of emails from messaging servers, data from excel, documents, etc., which channel partners can undertake and charge for.

3. Training and Support. HyperOffice Partners can offer paid training to their customers, as well as offer enhanced customer service and help desk services.

4. Business Process Automation and Reengineering. HyperBase is a robust database solution which forms part of HyperOffice. It allows users to build customized database applications to automate data collection and company workflows like lead tracking, CRM, order processing, customer ticketing etc.

HyperOffice Partners can develop custom workflows for the specific needs of their clients using HyperBase to automate business processes.

5. Customization. HyperOffice offers a range of customization options so that end users can mould it into their business environment – intranet publisher, web forms builder, custom database applications and so on.

Although HyperOffice has been designed for end users, companies may sometimes not have the time or inclination to use HyperOffice customization features to their full potential.

Partners can offer expert customization services for the specific needs of particular clients, or customize the solution for different verticals. For example, WeichertOffice is HyperOffice branded and customized for the realty industry.

6.    Integration. HyperOffice offers you the ability to integrate with third party solutions. You may charge your clients for integration with legacy systems or third party SaaS applications, or create and sell integrated bundles of different SaaS solutions.


As IT vendors have found, moving to the cloud is no longer an “if” question. The benefits of SaaS are so obvious, and now that it’s a trusted and proven model, the next five years are going to witness massive adoption, which numerous studies confirm.

The Channel remains as relevant as it’s ever been, because end users still see them serving their traditional roles of advisors and consultants in the IT value chain.  Increasingly distributed workforces and the emergence of business mobile technology have ensured that cloud based communication and collaboration are going to be the first wave of SaaS for SMBs. They also offer the largest opportunity because they are universal needs across businesses and industries.

So why shouldn’t they get these solutions through you?

HyperOffice brings you a trusted and experienced partner willing to go the extra mile to ensure your success. We offer you an opportunity to be in the eye of multiple converging trends – SaaS, communication, collaboration, mobility. You can find a place in the SMB market early, and open new vistas. And your marketing dollar builds your brand, not ours.

The window to the cloud is open, and you have to decide if they want to be amongst the leaders, or lag behind.

1. Visit our Partner’s Site –

2. Check our Partner Programs.

3. Contact us!

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