4-page Case Study - Posted 11/17/2008
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Online Communications Solution Opens New Doors for IT Service Provider
Business Engineering, Inc. (BEI) has been designing, building and maintaining Microsoft® Windows Server®-based networks for clients in the Washington D.C. area for more than 20 years, but it knows that in-house infrastructures are not right for all organizations. BEI wanted a solution that would enable its clients to access to an enterprise-grade messaging and collaboration environment that they did not have to build and maintain in-house—and it found just the solution in the Business Productivity Online Suite from Microsoft Online Services. By reselling Microsoft Online Services, BEI can meet its clients’ need for enterprise-grade messaging and collaboration services, but requirements for in-house infrastructure and IT support resources are significantly reduced. It’s more cost-effective for BEI customers and it opens doors—and increases revenues—in ways that BEI could not before.
Situation
Business Engineering, Incorporated (BEI) is a self-described “IT staff for small and mid-sized organizations.” The Reston, Virginia-based firm of 20 consultants sets up, manages, and supports IT infrastructures for metropolitan Washington D.C.-based businesses, organizations, and associations, that have little or no internal IT resources of their own.
For many of its smaller clients, BEI has traditionally offered messaging and collaboration solutions based on Microsoft Small Business Server, which includes an implementation of Microsoft Exchange Server. But Small Business Server requires a physical server in the client’s office, and many small organizations simply did not want that or simply could not afford the upfront capital investment or overhead associated with someone supporting that server. In those circumstances, BEI might offer to put the client in touch with another service provider that offered a messaging solution based on Microsoft Exchange Hosted Services.
“It didn’t always make financial sense to build out an infrastructure for Small Business Server,” says Mike Jennings, President and Owner of BEI. “The baseline price always comes out to about $10,000 whether there’s one user or 30. For these clients, the hosted Exchange solution was far more cost-effective.”
But Jennings was not always happy to meet his client’s needs in that manner. The service provider that BEI recommended was reputable, but BEI had no other relationship with the service provider and could not effectively advocate for its clients in matters of service delivery or consistency. The solution solved the customer’s immediate need for an e-mail solution, but it did not fully advance BEI as a trusted business partner. It did not provide BEI any opportunities for additional consulting engagements nor did it provide significant additional revenues.
All that changed when Microsoft Online Services introduced the Business Productivity Online Suite. As a Microsoft partner, BEI suddenly had a messaging and collaboration alternative that it could offer its clients that was feature-rich and attractively priced. Moreover, Microsoft is a business partner with which BEI had a deep relationship and in which BEI clients would have the utmost confidence when it comes to meeting their SLA/uptime needs for e-mail. Now BEI could advocate for its clients, advance as a trusted partner, and see a clear path to additional revenue.
Solution
The Business Productivity Online Suite from Microsoft Online Services enables BEI clients to gain access to a range of enterprise-class services without having to procure or maintain an in-house infrastructure for those services. Many clients still need a server for file, print, database, or other uses, but removing e-mail functionality from the requirements means that server is less expensive—both to purchase and maintain. Microsoft Online Services enables access to collaboration tools and shared workspaces, workflow, desktop and mobile e-mail, calendaring and contacts, instant messaging, presence, audio/video conferencing, and Web conferencing. Yet because the applications supporting these services—including Microsoft SharePoint® Online, Microsoft Exchange Online, Office Live Meeting, and Microsoft Office Communications Online—run on servers residing in a state-of-the-art Microsoft data center, none of the organizations using these services need to invest in on-premises infrastructure to take advantage of these services.
Microsoft hosts and maintains the servers with its own staff of hardware and software experts, supplies patches and security up-dates in real time, and guarantees 99.9 percent uptime with a financially-backed SLA so BEI clients always have access to the latest, most up-to-date versions of the applications to which they subscribe.
The Business Productivity Online Suite offers still other advantages to BEI clients. Instead of having to purchase separate server and client licenses for infrastructure components such as Microsoft Office SharePoint Server or Microsoft Exchange Server, organizations using this service can simply subscribe to the applications they want to use. Users subscribe to the service on a per-user, per-month basis, which eliminates large up-front licensing costs and enables most organizations to cover the nominal expense of accessing these services using operational rather than capital budgets.
Benefits
The Business Productivity Online Suite from Microsoft Online Services delivers benefits to both BEI and its clients. As a cost-effective, enterprise-grade messaging and collaboration solution, it opens doors that BEI could not open before due to the higher cost of in-house solutions. As an extensible solution, it enables BEI to create customized, integrated solutions for clients, creating revenue-generating consulting engagements for BEI. As a solution that Microsoft hosts and BEI resells, it provides a highly available and low cost option for customers, while supplying BEI with a predictable and recurring revenue stream.
Opening Doors
Today, organizations no longer question the value of messaging and collaboration tools. The more pressing question is how they can afford the tools and services they want to use. Small organizations in particular are interested in finding ways to gain access to enterprise-grade messaging and collaboration services without having to build out a secure global infrastructure or supporting it with IT resources they do not have. Even with capable IT resources, most organizations would like to focus those resources on tasks that directly add value to customers and directly increase revenue to the company—neither of which most messaging and colla-boration infrastructures do.
With the Business Productivity Online Suite from Microsoft Online Services, BEI is able to offer its clients precisely the cost-effective, enterprise-grade, low-internal-overhead solutions they have been seeking.
“In the Business Productivity Online Suite, Microsoft Online Services is bringing together four enterprise-class messaging and collaboration applications at a very attractive price,” says Jennings. “Our clients can subscribe on a per-user, per-month basis. They don’t need to acquire individual client access licenses. They don’t need to worry about updating anti-virus and antispam software or upgrading from one version of Microsoft Exchange Server to a newer version. Microsoft Online Services takes care of all that.”
Offloading the Effort and Saving Money
BEI clients are also finding the offer very attractive. Consider CRGT, a 300-person IT services and security firm with offices in Virginia and New Jersey. The company had just been spun off from its former parent company and needed its own messaging and collaboration infrastructure—and needed it quickly.
CRGT is extremely familiar with what is involved in building and supporting a messaging infrastructure: It built and maintains the messaging system that the U.S. Army relies upon, a system that is both highly secure and capable of supporting hundreds of thousands of logons and messages every day. Given this knowledge, CRGT executives were not eager to divert IT resources toward supporting an in-house infrastructure when they could be focusing those resources on solving real client problems.
“I’d rather turn our own messaging and collaboration infrastructure over to someone else to maintain and support rather than do it ourselves,” says Tom Ferrando, CEO of CRGT. “We want to focus our time and energy on adding value to our own customers, not building and maintaining our own internal messaging and collaboration infrastructure.”
After conversations with BEI in which they compared internal and external messaging and collaboration scenarios, CRGT executives found the Business Productivity Online Suite to be the ideal solution. CRGT employees would gain access to all the messaging and collaboration services they needed—with which many were already familiar—and the company would not have to devote any of its IT resources to support them. At the same time, by choosing Microsoft Online Services, CRGT would save more than $60,000. BEI had calculated startup costs for to build out an in-house messaging and collaboration infrastructure to be nearly $190,000. By relying on Microsoft Online Services, startup costs to access the same functionality dropped to less than $125,000.
For BEI, these lower startup costs had their own benefits. The $60,000 that CRGT was happy to save came primarily from not having to acquire hardware and software licenses for the in-house infrastructure; it would still be paying nearly as much for the value-added services that BEI brought to the table—which meant that even though startup costs for CRGT would drop by some 35 percent, BEI itself would still earn more than 90 percent of the fees it would have earned if it had helped CRGT deploy an in-house infrastructure. Even though BEI is realizing a slightly lower fee, they recognize that they might not have made the sale at all if the option of Microsoft Online Services were not available.
Expanding Opportunities
For BEI, getting customers up and running on the Business Productivity Online Suite is only a first step. Long-term relationships are likely to arise as clients continue to consult BEI about integrating these extensible services into other aspects of their businesses. Microsoft research indicates that a company like BEI can anticipate earning $5 to $6 in attached services revenue for every dollar a client spends on Microsoft Online Services.
On top of that, BEI can anticipate the growth of its reputation as a trusted advisor. The fact that BEI can provide a solution that saves its client so much money demonstrates a serious commitment to putting the customer first—and putting the customer’s best interest in the forefront is the basis for long term trusting relationships.
“I'm already seeing new business opportunities with CRGT,” says Jennings. “We met the other day and started talking about an intranet site that their employees had been using to administer their 401K plans. I told them that the SharePoint Online services that they’re getting with the Business Productivity Online Suite would be perfect for that—and their first question was, ‘Is that something you guys can set up for us?’”
Tapping Into a Recurring Revenue Stream
For partners such as BEI, one aspect of reselling Microsoft Online Services may be a newly welcomed component of their business: the recurring revenue stream. For every client BEI signs to Microsoft Online Services, it receives recurring revenue for as long as that client continues to subscribe to Microsoft Online Services. As the client adds more subscribers or as it subscribes to additional services, the recurring revenue grows for BEI—even if all they do is sign someone up.
“Reselling Microsoft Online Services will be one of the top five things that help us continue to make money,” says Jennings. “The cost-to-value ratio for what you get is great, so it’s attractive to clients. The recurring revenues we get may ultimately amount to more than we take in on an hourly basis for other managed services, and that’s good for us. And in a recession environment? Being able to offer this package at low cost will be key to keeping our revenue stream flowing.”
“This is the way the Microsoft world is going,” Jennings continues. “We’ve been to the Microsoft partner conferences. We’ve heard Steve Ballmer talking about ‘software plus services.’ This is a train we knew we wanted to get on as early as possible.”
Microsoft Online Services
Microsoft Online Services is a business-class communications and collaboration software offering delivered as a subscription service, hosted by Microsoft, and sold with partners. These services help make it easier for customers to rapidly and cost-effectively access the most up-to-date technologies, and are designed for rapid deployment to provide customers with streamlined communications, simplified management, and business-class reliability and security.
For IT staff, Microsoft Online Services helps reduce the burden of performing routine IT management tasks such as installation, provisioning, ongoing maintenance, patches, updates, and upgrades, making it possible for them to spend more time on initiatives that move the business forward. These services are backed by strong SLAs and are designed to meet the regulatory compliance and reliability needs of enterprise customers. On a technical level, the services boast the sophistication and reliability that customers expect from Microsoft, which continues to invest heavily in building data centers to support these services.
For more information, visit: www.microsoft.com/online
For More Information
For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to: www.microsoft.com
For more information about Business Engineering, Inc. products and services, call (703) 528-8300 or visit the Web site at: www.beinetworks.com
