Web & communication software

Trends in Software as a Service

The combination of the software-as-a-service model and Web-hosting providers could give users a safe, sometimes low-cost and low-risk way to jumpstart Webcasting initiatives.

The emergence of software-as-a-service is posing both new opportunities and challenges that Microsoft and numerous other software vendors tried to address with new strategies and products detailed this week at HostingCon 2007 conference in Chicago. The conference focused on Web-hosting and the rapidly growing software-as-a-service market, with about 40 sessions that ran from Monday to Wednesday.

Many see the key player in the hosting/software-as-a-service market as Microsoft. The launch of Microsoft Windows Server 2008 next February, which includes a Web server called Internet Information Services 7.0, will give hosting providers "significant enhancements" improving security, scalability and reliability of software-as-a-service applications, Microsoft said.

"Focused on delivering a low total cost of ownership for its server products, Microsoft has developed key features such as integrated health management for Web services, optimized PHP, Hypertext Preprocessor application hosting on Windows, a fast and scalable configuration system, and delegated administration," Microsoft says in a press release.

"The market is moving very rapidly towards an on-demand world and the demand, therefore, for hosting facilities is only accelerating," says Jeffrey Kaplan, who runs the consulting firm THINKstrategies. "What you're seeing is everybody from Microsoft on down ... trying to do all they can to capitalize on that demand and offer new technologies to support the hosting companies' needs."

Web hosts provide server space, Web services and file maintenance to users or companies that want to build Web sites but do not have their own Web servers.

Web hosting plays an important role in the global software-as-a-service market, which reached US$6.3 billion in 2006 and is expected by the analyst firm Gartner to more than triple to $19.3 billion a year by 2011. The prominence of the software-as-a-service market can be seen in two initial public offerings filed this month, by NetSuite and SuccessFactors.

Software provider SWsoft referenced Gartner's prediction this week when it announced that five vendors will begin selling applications based on a standard it developed to make it easier for software vendors to sell applications through hosting providers. "The APS [Application Packaging Standard] 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," SWsoft said in a press release.

The five vendors at HostingCon who detailed their plans to use APS are Smart Online, which makes accounting, human resources and sales applications for small businesses; Roaring Penguin Software, an antispam vendor; ShopSite, an e-commerce provider enabling companies to establish online stores; CCMedia, which measures online traffic with Web analytics tools; and FreshBooks, which makes an online invoicing and time tracking service.

Here are some more Web-hosting announcements from this week:

*WebHost Automation and groupSPARK are partnering to let Web-hosting providers offer a hosted Microsoft Exchange Server.

-- CM4all released a new version of WebsiteCreator Business Edition, which lets businesses create company Web sites with Web 2.0 capabilities such as blogging and sharing of photos, videos and music. CM4all targets its products to OEM customers, such as telcos, Internet service providers, and Web-hosting companies that integrate CM4all technology into their own products.

-- Ensim, which makes management software for unified communications and collaborative infrastructure, demonstrated Unify Shared Edition 4.0, which was developed in collaboration with Microsoft and gives service providers a centralized platform to create, control and deliver hosted applications. The new release lets service providers manage Microsoft Exchange 2007 and SharePoint Services 3.0 in a wide range of deployments.

Microsoft says its own announcements this week reflect how the popularity of software-as-a-service is posing new opportunities for the Web-hosting industry.

"The adoption of software plus services has presented many new possibilities for the hosting industry to evolve and grow," John Zanni, managing director of worldwide hosting in Microsoft's communications sector, said in a press release. "There is a tremendous opportunity through the emergence of the Web as a business and consumer platform, but it also introduces potential challenges for hosting providers as the industry undergoes this transformation."

In addition to technical resources, Microsoft says it is developing "profitability models" for hosting companies that go beyond traditional hosting scenarios to encompass advertising, design and development. Microsoft says hosting providers should also grow their businesses by forging partnerships with value-added resellers.

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