XO Communications and Jamcracker today announced plans to offer popular business software as a service to small to mid-sized businesses, delivering applications such as collaboration, security and mobility.

The hosted software services will be available individually or as a bundle and will include applications such as BlackBerry hosted services, Microsoft Exchange e-mail and SharePoint collaboration server, as well as McAfee Total Protection security for small business and Arsenal Digital Solutions online desktop backup services.

Jamcracker will wholesale the services to XO, which will then sell them, through its direct sales force and channel partners, to SMBs. To date, Jamcracker has focused on smaller partners, such as ISPs, but recently shifted that focus to Tier 1 providers, and signed XO as its first.

“There are significant customer benefits for SMBs,” said Charlie Cary, vice president of small business services for XO. “They are going to like the fact there is no capital outlay, and the ease of having a single source to acquire and manage the applications. It is a natural progression for us, the 10 services we are going to be marketing are very close to core services so when we are talking to customer about telecom services, these services are logical extensions. We have strong bundling experience and the trust of customer because we have been providing voice and data to them.”

The Jamcracker Services Delivery Network will provide a catalog of on-demand services for which it has negotiated master distribution agreements and also will provide call center support and billing administration, under an XO label.

Jamcracker sees this as an opportunity to extend its market reach into a customer base it doesn’t now reach, said Steve Crawford, vice president of marketing at Jamcracker. “They know how to sell services, and they are already reaching that market,” he said. “They have a channel strategy similar to ours and they will not be competing with us with a direct channel.”

XO believes the mix of services will appeal to small businesses, Cary said, because they want more sophisticated applications but not the hassle of buying and managing them.

“The IT hat they have to wear is a big nuisance,” he said. “They don’t want to worry about the IT things they have to deal with day to day. This will free up time to focus on the core business and growing that business.”

XO also believes this will be a competitive differentiator.

“We are the first CLEC or ILEC that is doing this in any significant way,” he said. While Cbeyond Communications does offer a bundle of applications, Cary believes this goes farther and will have greater reach. “It helps us leapfrog them in terms of a bundle of great services. It’s a natural progression moving into the quasi-IT space as well as staying with the telecom space.”

The software will be provided for a per-user monthly fee of between $2 to $15. Initially, XO is launching the software services to its embedded base of customers, then will make it available to new customers on a market-by-market basis.