Solutions
Microsoft Apps Cloud: Service Provider Business Models
Offering Microsoft enterprise applications in private and hybrid clouds is an emerging market for cloud providers. Explore the business models you can offer using technology provided by Hosting Controller.
An Emerging Market for Private and Hybrid Clouds
Microsoft Enterprise Applications suite includes Exchange, Active Directory, SharePoint, Skype for Business, Teams, Hyper-V, RDS, VDI, and Office applications. Offering these applications in the public cloud is mostly dominated by Microsoft 365, but offering these Microsoft enterprise applications in private and hybrid clouds is an emerging market for other cloud providers. An estimated 85% of medium to large organizations worldwide are using Exchange for messaging or Active Directory for identity data.
Business Models
Four Ways to Offer Microsoft Apps as a Service
Hosted Private Cloud
The Cloud-Provider offers an instance of Hosting Controller Control Panel hosted on its infrastructure for every customer who wants a managed private cloud environment. The provider supplies Windows VMs that customers use to run Hosting Controller and other Microsoft applications, optionally with readymade VM images.
On-Premises Private Cloud
The Cloud-Provider only offers licenses for Hosting Controller software. The customer deploys Hosting Controller on-premises and uses it to manage Microsoft applications also deployed on-premises. The provider's infrastructure is not used directly.
Hosted Exchange Public Cloud
The Cloud-Provider deploys Hosting Controller in a multi-tenant configuration where one instance of a Microsoft application is shared among multiple tenants. The provider makes user-based subscriptions and takes an SPLA license from Microsoft for the hosted applications.
Hosted Exchange Multi-Cloud
The Cloud-Provider makes per-user subscriptions for Microsoft applications hosted on its cloud, with some applications offloaded towards Microsoft 365. The provider takes an SPLA license for the apps it hosts and CSP licensing from Microsoft 365 for the offloaded ones.
How IT Works
Order, Deploy, Hybrid, and License
Sample Offering
Customers start by ordering the required mix of virtual machines based on their target deployment topology. An order consists of at least one Windows machine running Hosting Controller itself and one or more machines for other Microsoft applications like MS Exchange, Active Directory, and SharePoint. Customers get root-level access to Hosting Controller, from where they login, onboard all the required applications, and start managing them with automation provided by Hosting Controller.
Licensing and SLA
For licensing, the Cloud-Provider includes the license price of Windows servers, while customers bring their own licenses (BYOL) for the rest of the applications and are responsible for Microsoft licensing compliance. For the SLA, the Cloud-Provider is responsible for infrastructure, i.e. compute, storage, networking, backups, and restore, while the customer is responsible for the operations of the software applications.
Microsoft Apps Hybrid Cloud
In this configuration, the customer is running some applications on-premises while some other applications—or accounts for some organizational users—are offloaded towards the cloud-provider. Hosting Controller supports two different configurations for Hybrid-Cloud offerings.
Replicated Hybrid-Cloud
The on-premises Active Directory instance is replicated with another instance of Active Directory. A trust relationship is established between on-premises AD and cloud-based AD. Customers can deploy Microsoft applications fully on-premises, primary on-premises with secondary in the cloud, primary in the cloud with secondary on-premises, or fully in the cloud—and switch based on availability or disaster recovery scenarios.
- Fully on-premises.
- Primary on-premises and secondary in the cloud.
- Primary in the cloud and secondary on-premises.
- Fully in the cloud.
Synchronized Hybrid-Cloud
The on-premises Active Directory is synchronized with cloud-based identity and access management systems. Cloud-based IAM systems can be another Microsoft Active Directory instance, native IAMs from AWS or GCP, cloud-based Radius/Diameter or other AAA systems, or cloud databases providing authentication. No trust relationship is required. Hosting Controller's AD Sync tool monitors on-premises AD for changes and copies them onto the cloud-based IAMs.
- Other instance of Microsoft Active Directory.
- Native IAMs from large cloud providers like AWS IAM and GCP IAM.
- Cloud-based Radius, Diameter, or other Authentication and AAA systems.
- Cloud-based databases providing authentication services.
Hybrid Multi-Cloud
The customer runs some applications on-premises and offloads others to cloud-provider offerings. The customer takes commercial licenses from Microsoft for on-premises apps. The Cloud-Provider takes SPLA for self-hosted apps and CSP licensing from Microsoft 365 for delegated apps. Revenue comes from Hosting Controller license plus subscriptions for apps on the provider's cloud and those offloaded to Microsoft 365.
Sample Costing: SPLA and CSP
SPLA prices apply when a cloud-provider offers hosted Microsoft applications on its own infrastructure. CSP prices apply when a cloud-provider or broker resells Microsoft 365 subscriptions, including multi-cloud offerings where some apps are hosted by the provider and others are offloaded to Microsoft 365.
Microsoft pricing is complex and large customers often receive discounts. It is estimated SPLA pricing is about 40% of typical subscription offerings and CSP prices are 70% to 80% of subscriptions offered—so gross margins are around 60% for self-hosted apps and 20% to 30% for apps offloaded to Microsoft 365.
