THINK IT Services

Although the Software-as-a-Service (SaaS) business applications and cloud computing development environments are getting the lion’s share of the attention in the press today, the most prevalent form of on-demand services continues to be hosted email and security services.

Email and security management are escalating challenges for IT and business decision-makers facing greater demands for real-time communications from their end-users, coupled with growing concerns about viruses, hackers, compliance and litigation.

As a result, an increasing proportion of companies and non-profit institutions are choosing to ‘out-task’ their email and security management to third-party hosting companies and managed service providers (MSPs).

However, enterprises and on-demand service providers alike are also recognizing that email, security, storage, archival, e-discovery, business continuity and disaster recovery are all intertwined. Therefore, IT/business decision-makers are seeking providers who can service as a strategic source for these services and providers are seeking to build service portfolios which can satisfy these requirements.

It is for these reasons that Symantec announced its acquisition of MessageLabs yesterday. Symantec has made it clear that it recognizes the growing demand for SaaS alternatives to traditional software products and is committed to providing on-demand solutions which respond to its customers’ rapidly changing needs. However, the company has also discovered that there are a myriad of internal and external challenges fulfilling this promise.

The acquisition of MessageLabs gives Symantec a proven set of on-demand services and experienced business executives who can help the software vendor overcome the obstacles which have prevented it from rolling out its offerings more quickly.

MessageLabs’ hosted email and security services can complement Symantec’s storage services. In addition, MessageLabs has a solid installed base of customers and strong channel partners, an aspect of the on-demand services puzzle which Symantec has been trying to assemble. Symantec has its own vast base of customers and channels to market for its traditional products and services, along with the service delivery infrastructure and provisioning engine it has built for the Symantec Protection Network (SPN).

Because of MessageLabs’ track record of success, the company’s leadership team will assume responsibility for Symantec’s entire on-demand services portfolio and go-to-market strategy. The infusion of this new leadership, along with their indepth understanding of the business requirements for delivering scalable on-demand services, should enable Symantec to accelerate its efforts to become a major player in the SaaS marketplace.

This isn’t the first acquisition of this nature. Google bought Postini and Dell acquired MessageOne in response to the same market trends. Now, Symantec is in a better position to respond to its customers’ needs and keep pace with the competition for these services.

Since Michael Dell returned to the helm of his company, he has been dramatically reshaping its channel and services strategies. He is also putting the IT industry on notice that the way hardware companies define and deliver services is changing.

The old guard of the IT industry recognized in the 1980s and 1990s that tech support, professional services and outsourcing could generate lucrative revenues and create greater lock-in opportunities in an increasingly commoditized hardware business. Lou Gerstner saved IBM by turning it into a services company.

Dell bucked this trend by investing in sophisticated supply-chain, fulfillment and customer service processes which enabled it to succeed as a low-cost, high-margin manufacturer.

HP stole a page from Dell’s book and usurped its price advantage. Without a strong services story to serve as a safety-net, Dell was vulnerable to customer defections. It is now seeking to regain its competitive advantage by redefining how services are delivered. In the old world, services were a people-intensive business and highly customized. Dell plans to automate and simplify the way services are delivered.

After acquiring SilverBack Technologies and Everdream in 2007, Dell acquired MessageOne this past week. MessageOne is a leading provider of Software-as-a-Service (SaaS) enabled enterprise-class e-mail business continuity, compliance, archiving and disaster recovery services. MessageOne is in the same business as Postini, which Google acquired last year to fortify its Gmail capabilities and recently rolled out as an enterprise-class email archival service.

What makes Dell’s acquisition intriguing is the fact that it doesn’t offer an email service. But, that isn’t stopping Dell from adding this functionality to its rapidly growing portfolio of SaaS capabilities that now include remote desktop, server, security and helpdesk management services.

Dell has promised to deliver these SaaS capabilities via its growing array of channel partners to support their managed service offerings, but has also admitted that it will utilize them to support some of its customers directly. This direct service capability and a history of ignoring resellers has led to rising concerns among channel companies that Dell is going to commoditize their traditional on-site support business.

Dell isn’t just SaaSifying its services business.

Dell also unveiled this week a new Storage Simplification Assessment program which Dell promises will simplify the process of evaluating and selecting storage, backup, recovery and archiving solutions. Dell will offer these assessments directly and through its channel partners.

Dell has also restructured its customer support portfolio, consolidating its previous offerings into two simple options,

1. ProSupport for IT
2. ProSupport for End-Users

At Ziff-Davis’ recent Channel Summit, Dell’s channel czar in the Americas–Greg Davis–was asked if Dell intends to commoditize services the way it commoditized the hardware business. He said no, it planned to simplify the way services are packaged and priced.

If Dell’s moves are successful, they will encourage customers to set new standards for how services are sold and delivered. This will force other technology companies to restructure their service portfolios and streamline their delivery mechanisms in order to compete. It will also force channel companies to re-think how they package, price and position their services.