Microsoft says dealers need not fear hosted IT services

Hosting is the future, but SMBs still want a trusted local supplier.

Hosted IT services delivered over the internet are rapidly being adopted by small to medium sized businesses (SMBs), according to new research from Microsoft, but the software giant reassured local IT shops that this trend will not put them out of business.

The findings come from research conducted by Microsoft and analyst firm Freeform Dynamics into attitudes to IT and hosted services by smaller businesses, presented at a roundtable session in London.

According to Microsoft, over 75 percent of SMBs are now considering hosted IT services, up from as little as 14 percent a couple of years ago.

Dale Vile, research director at Freeform Dynamics, attributed this to Microsoft's launch of its Business Productivity Online Suite (BPOS) last year, which has legitimised hosted IT services and set a "baseline" for pricing.

"There is now a lot of choice, whereas there were only one or two providers offering something like hosted Exchange before BPOS," he said.

The survey looked at over 3,000 small businesses globally and found that most are weathering the economic storm well and looking to take advantage of the upturn when it comes.

Among the findings is that small businesses seem to be put off by talk of cloud computing, but fully understand the advantages of hosted services that might be delivered this way.

The message for service providers is "don't sell cloud to SMBs; sell them services that offer them value", said Michael Korbacher, Microsoft's director for Software Plus Services in EMEA.

Hosted services offer smaller companies a quicker time-to-market for a lower capital expenditure - often just a few pounds per user per month - and allow for easier upgrades as they are not stuck with outdated technology that could be tricky to upgrade or need replacing.

Microsoft also said that service providers should not regard hosted services as a threat to their business model, but as an opportunity.

"Some in the channel think that companies such as Microsoft are trying to cut them out of the loop, but they need to get with the times and start reselling services such as BPOS alongside their existing solutions," said Robert Epstein, head of small business at Microsoft UK.