Small Business SaaS: Different Approaches from BT, 1&1 and GoDaddy

• By Isabel Wang on January 24, 2007

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Dennis Howlett has the scoop on British Telecom's version of AppExchange (Salesforce.com's ecosystem for 3rd party developers). Last week, BT made a presentation to 200 software companies at Microsoft's UK HQ. BT's customer base includes 27 million consumers and 1.8 million small businesses; it wants to develop a marketing and distribution channel for 3rd party SaaS apps. It hinted that successful partners may find themselves acquired over time. (Last November Silicon.com noted that BT has a dedicated team of scouts who identify, evaluate and acquire hundreds of new technologies per year.)

BT cites an IDC survey that's summarized here by David Terrar. It showed that "the value of software is no longer determined by the functionality available, but by users' feelings and experience as they interact with the solution." Also, end users want predictable licensing and maintenance costs, and they prefer having their applications managed by someone else. IDC concludes that SaaS growth (20%/year) will far outpace software growth (6%). (In a 2005 report, IDC estimated that the web hosting market will grow by 16%/year through 2010.)

I agree with Dennis that the actual extent of BT's success matters less than their validation of SaaS. And like David, I'm intrigued by the BT/Microsoft relationship. The recent launch of BT Workspace, an online collaboration service that's somewhat competitive to Office Live was not mentioned at the Microsoft-sponsored presentation. (BT Workspace is powered by a modified version of Microsoft Sharepoint, though. BT co-branded it from SMBLive.)

Anyway, that's BT's story. If you think they're a British phone company, check out this Business 2.0 article on their world domination plans. Which includes web hosting. In the US corporate market.

Meanwhile, 1&1 is also broadening its portfolio. Last week I got a free trial invite for its new online conferencing service, which 1&1 co-branded from Spreed. I'm not excited about the silo-ed approach, where customers are given separate logins for Spreed. I hope 1&1 will consider integrating this with their Sharepoint service, so that customers can host live meetings as well as share files asynchronously.

At this point, GoDaddy seems to be lagging in the SaaS race. The company recently launched Hosting Metropolis, a "social tool" for helping its 1 million+ shared hosting customers choose between 30 free applications they can install. But where's the recurring revenue in that? I really think multi-tenant SaaS beats single user apps - for both service providers and end users.

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