Microsoft is taking a page from its traditional software development program to help vendors looking to get into the software-as-a-service market (SaaS). The company on Tuesday announced the SaaS On-Ramp Program, which is modeled after Microsoft's ISV Royalty Licensing Program.
Microsoft (Quote) launched the ISV Royalty Licensing Program six years ago to assist software developers in getting up and running, using Microsoft products. It allowed for licensing Windows Server and SQL Server, plus other Microsoft server-side technologies.
With the SaaS On-Ramp Program, ISVs can obtain Windows and SQL Server 2005 at no up-front cost and no charge for the first 30 days. This gives them time to get their applications up and running. Microsoft then charges monthly fees on a sliding scale, based on usage, after the first 30 days.
Through the MSDN network, ISVs can begin building their applications and testing them on SQL Server, so in total, the cost of setting up an SaaS network would be for the hardware and the MSDN subscription.
"This program is designed to help ISVs get going and jump in as quickly as possible and remove the difficulty of a large, up front payment they would have to make to set up their infrastructure," said Michael van Dijken, lead marketing manager for hosting solutions at Microsoft.
Licensees will get Windows Server with an eight-processor support license and SQL Server with dual processor support. In addition, other Microsoft server technologies like BizTalk will be available through the Services Provider License Agreement, a licensing program that allows ISVs to license Microsoft products on a monthly basis.
Paul DeGroot, analyst with Directions on Microsoft, thinks it's an interesting approach because there is so much activity online built around database-driven apps.
"Without this, they would face more competition from databases in particular, such as MySQL, which are very popular among developers. This makes it possible for people to use a very good database without having to put up a lot of money out front," he said.
The program also provides some economic cushion because Microsoft ties payments to traffic. "One of the uncertainties about Web apps is you don't know how many people will come, so this allows you to scale up efficiently," said DeGroot.
The Microsoft SaaS On-Ramp Program is available now.