Adapt or perish: How Cobweb overcame the threat of Office 365

Vendors are increasingly offering SaaS solutions that might circumnavigate the channel. How did Europe's largest Hosted Exchange provider learn to live with Office 365?

“Adapt or perish, now as ever, is nature's inexorable imperative,” H. G. Wells wrote in 1945. The adage could easily be Cobweb Solutions’ company slogan.

Cobweb is not a name on everybody’s radar but this hosted communications provider has a heritage to be proud of. Started 20 years ago by Paul Hannam, a little home-based web-hosting operation was eventually to become Europe’s largest independent Hosted Exchange provider. Hannam joined forces with now CTO Julian Dyer in 1996, making Cobweb what it is today.

Like so many, Cobweb was one of those companies that was doing cloud before anyone was calling it ‘cloud’. Of course, there are many more players on the hosted field these days, but Cobweb helped Microsoft write the book on large-scale multi-tenant Exchange, bringing affordable mailboxes to masses.

Co-founder and CTO Julian Dyer explained what made Cobweb’s proposition so powerful. “The difference over the years has been our ability to create multitenant Exchange services that deliver the reliability and performance needed but at the price points for SMEs.”

“This involves extensive use of automation, with one of the key differentiators being the use of the Parallels Automation platform. Cobweb has been working with this capability since 2007 and is now one of the biggest deployments outside of a Telco,” Dyer explained.

“Cobweb has also been an active member of all the Exchange TAP (Technology Adoption Programs) run by MS since Exchange 2003. This gives us access to early beta code and support to operate the code in production,” he adds.

It’s this access that allowed Cobweb to launch Exchange 2013 on the very same day as the public GA.

Down came the rain...

So business was good for this little spider, but - just as many in the channel have witnessed – the hand that fed Cobweb, began to bite it. Office 365 is Microsoft’s direct SaaS solution. Reaching General Availability in June 2011, 365 was Microsoft’s answer to Google Apps and unified all of the Redmond firm’s productivity applications and services into one neat little package – including Exchange.

vendors now have the ability to circumnavigate the channel altogether, should they so choose

All well and good; but for a business that was founded on the ability to deliver low-cost, off-prem mailboxes, one would imagine that the arrival of Office 365 could serve as a deadly blow. Indeed, it’s a phenomenon that is reshaping the channel as we know it; vendors now have the ability to circumnavigate the channel altogether, should they so choose.

So, what do you do when your partner delivers a competing solution that is equally (if not more) cost-effective, has the same capabilities and is backed with enough marketing clout to send most running to the hills? Adapt or perish, of course.

For a while, Cobweb went through what you might call an identity crisis. Its bread and butter offering was under direct threat from Office 365 and it struggled to figure out how to the solution would integrate with its offerings. While Office 365 was going from strength to strength, becoming a billion dollar business for Microsoft by 2013, it wasn’t without its flaws. Despite being billed as an off-the-shelf solution, O365 lacked any legitimate support when it came to on-boarding and after-sales support was almost non-existent. For a solution geared specifically towards SMEs, these two issues were significant ones. On top of this, there were fears amongst many European businesses that their data would be shipped over to American shores. With the Snowden scandal still unravelling, data sovereignty was a growing concern. It was on these factors that Cobweb mounted its offense.

“If you compare like-for-like, Hosted Exchange and Office 365, from a price perspective, O365 can look more cost effective,” explained Mark Davies, business development director at Cobweb. “But what we’ve found is that it’s the wrap around the service that customers are placing value in. How easy do I get moved from on-premise? What does my support look like afterwards? Can I add additional services? Where does my data reside?  All of these sorts of questions. At the time, we thought customers would look for a like-for-like comparison, but that’s not what they’re doing.”


During the course of a year, Cobweb refocused itself, looking closely at what it brought to the table – UK data centres, nearly two decades of experience in migrating customers away from on-prem infrastructure and 24/7 UK support. It took the USPs, wrapped them around Office 365 and rather than run away from the competition, Cobweb embraced it.

“We now have an excellent recruit in Ash Patel from Insight who will oversee Office 365 in our roadmap and we’re also working a lot more closely with the 365 team at Microsoft. So where it was a quandary this time last year in terms of how we fit it into the business, now it’s very much a part of the business,” Davies said.

Underscoring Cobweb’s shift in rational is the recent announcement that it is now one of the elite few UK companies selected to deliver the Microsoft Cloud Solution Provider (CSP) Program.

The CSP certification is reserved for leading cloud enablers for small and mid-size businesses, and allows the firm to own the entire Office 365 customer relationship, providing support and billing directly.

The Hampshire company has also recently announced that it is the latest thought leader to join the Cloud Industry Forum (CIF); an industry body that aims to improve standards and education in the cloud industry.

A new identity

Cobweb recently hosted an event at its shiny new offices in One Canada Square, Canary Wharf. The sold out ‘Liberating Technology’ event saw a plethora of experts speak on the future of cloud. It was an impressive occasion and was well received by attendees, but the day achieved something more than sparking blue-sky discussions; it was as if Cobweb was undergoing a renaissance. A new brand, a new office, a new self-belief.

There’s no point in saying, ‘that’s what we used to do and that’s where we used to make our money'

Mark Davies, business development director, Cobweb

“Have you’ve ever seen The Matrix, where Neo gets stuck in the train station with the agents?” Davies asks MicroScope. “Someone asks why he isn’t running and Morpheus simply says ‘Because he’s starting to believe’. I think that is where we are. We know that we do have the capability to do this. It’s that realisation that we have a really good wrap of services that people want.”

So what advice does Cobweb have for VARs undergoing the same pressures in this new cloud-driven world?

“They’ve got to look further up the value chain because the world that they’re used to is gone and it’s not coming back. There’s no point in saying, ‘that’s what we used to do and that’s where we used to make our money.’” says Davies.

“Where do I add value now? What headaches does the customer have?  On-boarding? Training? The layer before the infrastructure is, of course, connectivity. Can they add value there? There’s no use in saying ‘that’s not my skillset’-  it needs to be your skillset. They need to find a different place in the chain that they can add value. If they don’t, that’s where a lot of VARs are going to struggle. They have to adapt."

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