Although it gained little industry attention, Microsoft demonstrated its chutzpah on May 1 by unveiling a platform and set of “tools and best practices” to enable other independent software vendors (ISVs) and hosting companies to jump onto the SaaS bandwagon. This announcement came even as Microsoft fends off criticism regarding the viability of its own software-as-a-service (SaaS) offerings.

According to the company, the Microsoft® Solution for Windows®-based Hosting for Applications Version 1.0 will provide ISVs “with the tools and guidance to design service-enabled software applications and facilitate user provisioning, performance monitoring, usage tracking, and reporting and service aggregation.”

Microsoft claims that its new solution will address four critical hosted application needs: uptime, service provisioning, security and management. Specifically, Microsoft is offering,

• Microsoft Operations Manager (MOM) 2005 to address the uptime needs.
• Microsoft Provisioning System to handle the business service management needs.
• Windows-based Hosting for Applications to automate the security update and patch management processes.

In addition, Microsoft is offering a Services Provider License Agreement (SPLA) on a monthly subscription basis with no upfront investment or commitment necessary from the ISV.

Microsoft claims that its solution “provides a comprehensive set of modular and tightly integrated components, scripts and guidance that enable them to build environments that are operationally efficient and highly scalable for delivering software as a service.”

Well, you have to give Microsoft credit for not being afraid to try to turn lemons into lemonade!

Even as the company is struggling to release its own SaaS alternative to its legacy applications–Microsoft Live!–it has the audacity to try and position itself as an enabling technology vendor in the SaaS market.

To give them their due, many of Microsoft’s database and development tools are being utilized by today’s SaaS providers to build their applications. But, to suggest that by offering some of the piece-parts for SaaS entitles Microsoft to position itself as a qualified platform provider and ‘best practices’ proponent is a stretch.

Adding to the bitter taste of Microsoft’s announcement is the ‘hosting’ terminology. While the term is still used by many ISVs to describe their SaaS solutions today, a growing number of knowledgeable users recognize the fundamental differences between the ineffective, hosted applications of the past and the more sophisticated, user-friendly, on-demand software solutions of today. Microsoft’s decision to use the hosting rather than software-as-a-service terminology may be an admission that its strongest suit is in the old guard business rather than today’s red-hot SaaS market.

Just take a look at THINKstrategies’ SaaS Showplace if you want to find a list of companies from A-Z that already have more viable enabling technology skills and solutions in each of the areas that Microsoft is targeting.

For instance, Aria Systems offers on-demand user provisioning and usage tracking solutions for a growing list of entertainment gaming companies, as well as a variety of service providers (xSPs). And, WrappedApps has a 30-day application conversion solution for ISVs. Even OpSource, who is quoted in Microsoft’s announcement, has far more expertise and experience to offer a portfolio of SaaS enablement solutions. (None of these companies are THINKstrategies clients.)

I don’t want to appear naive about this marketing gambit by Microsoft. This certainly isn’t the first time the company has tried to establish itself as a leader in a market segment where it was failing. And, Microsoft isn’t the only major vendor who has tried this ploy to capture mindshare and retain, if not gain marketshare.

And, putting aside any immediate indignation over Microsoft’s announcement, it’s good to add another important endorsement of the SaaS concept from a pivotal software player. In January, it was easy to criticize SAP’s meek entry into the SaaS market, but necessary to recognize how SAP’s entrance validated the SaaS movement. Today, we can easily question the substance of Microsoft’s announcement, but should again thank Microsoft for the endorsement and validation of SaaS.

However, if I were making the decisions in Redmond, I would have positioned this announcement differently.

Rather than simply promote my own questionable ‘solutions’ and qualifications as a SaaS enabler, I would have borrowed a page from Salesforce.com and established an AppExchange-like ‘ecosystem’ of third-party SaaS enabling tools that would give Microsoft greater credibility in the industry, while winning Microsoft more allies and inroads into the SaaS marketplace.

Microsoft may still move in this direction. Until it does, Microsoft will have a long way to go to establish itself as a serious SaaS enabling technology vendor. Of course, most experienced IT professionals, as well as enterprise decision-makers, know better than to adopt any solution that is labeled Version 1.0!