Hosted SharePoint stifles partners, for now

Microsoft's announcement on Monday that it would host SharePoint for businesses of any size left some third-party software providers surprised -- and even annoyed.

Late last year the company began hosting SharePoint for large enterprises, and on Monday it launched a beta of the hosted service for businesses of any size with plans for general availability by the end of the year.

That came as potentially bad news, at least in the short term, for some companies that have built software that runs on SharePoint. Some of them won't be able to serve customers of the Microsoft hosted offering.

For example, KnowledgeLake has a product that lets companies scan and input documents into SharePoint. The product includes client and server software. Customers of Microsoft's hosted SharePoint offering wouldn’t be able to deploy the server component, which would prevent them from viewing or searching documents after they scan them, said Chris Caplinger, CTO for KnowledgeLake. Caplinger was attending the annual SharePoint conference in Seattle.

KnowledgeLake, a Microsoft Gold Certified Partner, is usually briefed by Microsoft about these types of announcements that can affect its business. But this time, the software giant didn't tell the company in advance, Caplinger said. As a result, he wasn't sure if Microsoft planned to enable support for his third-party software for customers of the hosted offering.

Nintex CEO Brian Cook was similarly uncertain about what the announcement means to his company, which offers a workflow management tool to SharePoint users. "We're not sure how we fit in," he said. "We can't necessarily dump our application on top of Microsoft's servers."

They may be relieved to hear that Microsoft intends to accommodate these partners in the future. "The new beta can't run custom code today," said Eron Kelly, director in Microsoft's business online service group. "But we're investing heavily, so in the future, we'll be able to run applications in the online environment."

There are a couple of ways Microsoft could decide to support its partners. It could run the third-party software on its own servers, or the third-party companies could run their software in a hosted environment that connects to Microsoft's hosted services, he said.

While the third-party companies were uncertain about how they might serve users of the hosted service, they were mostly confident there will still be a large enough market of companies that decide to use internal SharePoint implementations instead. Even though Microsoft is showing off very large enterprises, such as Coca-Cola, as hosted SharePoint users, most of the partners agreed that the hosted version is more likely to appeal to smaller businesses.

"The larger organizations are less likely to go to hosted," said Larry Roshfeld, senior vice president at CorasWorks, which offers software designed to make it easier to build applications on SharePoint. Others agreed. That's in part because big businesses are often concerned about letting a third party host potentially sensitive corporate data.

Richard Howard, an IT administrator for a division of DRS Technologies with about 650 workers, about 50 of whom currently use SharePoint, finds the idea of a hosted version very attractive. However, he said moving to the hosted service would all depend on cost. He's looked at offers for other hosted services that came with astronomical price tags.

Microsoft has not disclosed what it will cost to use the hosted version of SharePoint, said Kelly. "Price will be very attractive to customers of any size when you take into account things that come with running and maintaining an application like this, including hardware, people and bandwidth," he said. Still, the value of just using one hosted service may not be "as compelling" as buying a suite of hosted products from Microsoft, such as Exchange and Live Meeting, in addition to SharePoint, he said.