Vendors to Hosting Providers

• By William Toll on November 13, 2007

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Being a product management professional at hosting companies for eight years now, I have had the opportunity to listen to a lot of "pitches" - for services ranging from web design tools to intrusion detection systems.  I am always amazed that many of these companies do not know how to "talk to me" and have not "done research" on our industry. 

In reviewing opportunities and preparing business cases I keep the following points in mind:

-Choosing a vendor with a service/product that customers want and an experience that customers will find intuitive and elegant-Choosing a vendor that understands our business model-Choosing vendor that has a long term strategy-Choosing a vendor that can support these services over time

The business opportunity for these vendors looking for growth and market share in our industry often find two results: little or a lot.  The companies that are successful in the middle have a habit of disappearing or becoming a commodity. 

Often times these days it comes down to the business model.  Hosting margins can be high and hosting companies expect the same high margins on the add-on services we are bundling.  The problem is many of the vendors in our space are moving off perpetual licensing business models to monthly services/licensing revenue models.  Having not experienced 30 or more months of recurring revenue from a customer, like hosting companies do, these vendors do not know how to license and price their service.

On the other end of the spectrum are companies that aggressively sign-up hosting companies only to have a wavering interest in our space or a short term strategy.  That leaves hosting companies customers with a bad experience, especially when you have to retire the offering.  A good example from my distant past was PowerMailbox.  They signed up over 50 hosting companies, only to have been sold and shut down less than one year from launching.  Another example is a famous Anti-Spam vendor, who, after being acquired by a famous software company seemed to have stopped updating their platform.

In the end, it's about choosing services that your customers want from vendors that understand your business model and are in it for the long run.

Tags:  spam  Iona  SAP 

William Toll has held product management positions in the Web hosting and financial industry since the late 1990s. Now at the leading hosting services provider, NaviSite, William is responsible for developing the company's small business hosted product lines, including one of the industry's biggest ... (Read full bio)

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