There is no Partner Business Model in Microsoft BPOS

The Microsoft BPOS offering is making the market. Although this offering is new, the offering has been served by many partners for at least a half decade. 1.800 partners world-wide are estimated to offer some sort of Hosted Exchange (The flag-ship product in the suite of BPOS) or BPOS offering. By simple calculation of market growth and going back through numbers of adoption, I would estimate that there are roughly 1.200.000 seats of Hosted Exchange.

So why do I state that there is not BMO in partner sold Microsoft BPOS? Well, again simple calculation. Given some indication of US based sales compensation, I would guess an average salesperson earns $64.800 a year without bonus, provision etc. Based on the compensation model of Microsoft Online (12%+6% first year, 6% years following) – we can calculate the needed seats sold, to make return-of-investment.

Microsoft Exchange Online, priced at $10 per seat, per month – needs 3.000 SKUs sold per year (63 per week).

Microsoft Online Suite, priced at $15 per seat, per month – needs 2.000 SKUs sold per year (42 per week).

Astonishing enough this does not even include overhead for support, implementation, phone and related expenses – only the salary for one salesperson. A short help the year following is that salesperson will need to increase the install base – without churn – only by 2.000 seats (Exchange) or 1.333 seats (BPOS). That is – if the customer selects to go with that partner, when re-enrollment of the Microsoft BPOS offering is requested. Which is the customers’ free choice, and relies on the correct selection in a dropdown…?

With the above numbers and market intelligence in mind, the average seats served per hoster is 667 – and I would imagine that there is more than one salesperson per hoster in those. So with Microsoft BPOS you would have to outgrow the average by 450% – but only grow the world-wide install-base by 1% a year.

And if my previous post makes sense to you – you would know that BPOS is strategic and Exchange is by selection of many, many customers only.

So before selection your model, be sure to scope if any partner will give a good compensation (average of 20% compensation yoy). You can ask my advice by adding a comment.

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