Microsoft, BT hook up for hosted apps

Small customers will soon get access to an online marketplace for "software as a service" applications.

Microsoft and BT are to launch an online marketplace for hosted applications, with small-business customers as the target.

The BT Applications Marketplace forms part of Microsoft's concerted push into the field of "software as a service." In this delivery mechanism, software is remotely hosted and usually paid for on a monthly subscription basis, rather than hosted on a company's own server and paid for up-front.

In the marketplace, customers can expect to see "commodity apps" such as those for human resources, customer relationship management (CRM) and payroll, said Claire O'Halloran, of Microsoft's partner development group. But the linkup with the U.K. communications giant will also likely provide niche applications geared to the likes of realtors and dentists.

Around 30 hosted applications are expected to be available through the marketplace at its launch.

Software as a service is seen by some as ideally suited to small and midsize businesses because of it offers reduced risk and lets customers quickly drop an application that is not working for them in favor of another. It also provides an opportunity for independent software companies to access large corporations.

However, it is also seen as a threat by IT departments in some small companies. Purchasing decisions for software as a service are generally made by business executives rather than IT managers, who fear their jobs could fall victim to what is essentially a form of outsourcing.

On Wednesday, Microsoft announced the launch of its "Partnering for the Future" initiative, involving the creation of a new channel of partners, ranging from application developers to telecommunications providers and hosting companies.

The move follows the November introduction of the two-day SaaS Incubation program, which is designed to bring software vendors, especially those developing applications on the back of Microsoft's Live platform, into the software as a service fold.

The Microsoft-BT linkup will be based on Microsoft's Connected Services Framework, a service aggregation platform.

On Wednesday, O'Halloran said her team was introducing software companies to BT and putting them through a "Dragon's Den" pitching process. Official registrations for the marketplace will open in March, and the service should become available soon after.

"BT has customer reach, (and) we have a bunch of ISVs that have traditionally been more sales-led, but are wanting to move to being marketing-led," explained Karl Noakes, director of partner development and marketing for Microsoft. "There will be an element of survival of the fittest here, and customer demand will win out."

One example of a vendor that seems likely to be part of the marketplace is Nitrosell, which supplies integrated e-commerce applications.

Those software makers whose products prove particularly popular could see their products incorporated into the British telecommunications company's own portfolio, under the BT brand, O'Halloran said.

BT confirmed Wednesday that the Applications Marketplace was "something we're working on with Microsoft, which will be launched later this year," but declined to comment further.

David Meyer reported for ZDNet UK in London.

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