March 2, 2004 2:15 PM PST

IBM pulls out all the partner stops

IBM will spend $1 billion on business partner programs this year in an effort to drive sales and take market share away from competitors.

At its PartnerWorld Conference in Las Vegas, Big Blue announced on Tuesday a plan called ISV Advantage for Industries. The effort is designed to boost the number of application providers that create finished applications tailored to specific industries using IBM infrastructure software.

As previously reported, IBM will be offering incentives to independent software vendors (ISVs) focused on about 15 industries, such as health care and finance, in an effort to bolster IBM's industry-specific sales approach.

The program, focused on specialized industries, is an addition to IBM's ISV Advantage program, which now has about 200 participating companies targeting small and medium size businesses. Ultimately, IBM hopes to have about 200 to 300 partners in each industry, said Buell Duncan, general manager of ISV and developer relations.

IBM already has partnerships with large packaged application companies, such as SAP and PeopleSoft, but now it is focusing on independent software vendors with industry expertise.

"More and more customers are looking for industry-specific solutions, so (application) companies that provide high value-add become important," Duncan said.

Another industry-specific program, called PartnerWorld Industry Networks, is a series of marketing and technical resources to foster collaboration among IBM partners in specific industries. The new program will include a revamped Web site organized along six industries.

IBM also is expected to announce partner-oriented programs designed to spur sales of specific IBM applications, including its Express line aimed at midsize businesses.

Grab your partner
Also on Tuesday, IBM unveiled its so-called Orchestration Provisioning Automation Library, or OPAL, a set of guidelines targeted at business partners for using IBM's Tivoli Provisioning Manager and Intelligent Orchestrator products.

OPAL will give systems integrators better tools for configuring IBM's provisioning software with third-party applications, said Sandra Carter, vice president of marketing at IBM's Tivoli division. For example, OPAL will describe how best to implement Citrix for the first time and how to employ the software to most efficiently use hardware servers, she said.

In another announcement Tuesday, IBM detailed a similar partner program for its business performance management products, said Scott Hebner, IBM vice president of marketing and strategy for developer relations. Business performance management software gives corporations a way to measure and view operations in near real time, such as sales or manufacturing processes. The company has released "dashboards," or views into business processes specialized for six industries.

As part of IBM's push into midsize businesses, the company plans to release two toolkits for developers and an expansion to its program to attract ISVs that cater to small and medium size businesses. IBM estimates that the market for smaller organizations is about $300 billion.

The Integrated Runtime is a package of products from IBM's Express line of software aimed at smaller organizations. The new bundle includes WebSphere Application Server Express Java server software, DB2 Express database and Web server software, said Steve Mills, group vice president of IBM's software group.

A second toolkit is made up of utilities designed to help current Microsoft business partners move their applications over to IBM's software.

Competition for Microsoft
Mills said IBM expects to take market share away from Microsoft, which has a large customer base among small and medium-size businesses. IBM historically has focused on large corporations, but now the company's products and partner efforts are organized to gain more customers among smaller organizations.

"A couple of years ago, we decided to expand our business more aggressively in the midmarket, and there is absolutely nothing Microsoft can do to stop that--because it's not about Microsoft," Mills said.

"If IBM does a great job building strong relationships and driving satisfaction, then IBM will build its business in the midmarket. It's inevitable," he said.

IBM executives also said that some ISVs are concerned that Microsoft will offer competition to them because the software giant purchased two packaged application companies that target small and medium size companies. IBM exited the applications business four years ago in a deliberate effort to eliminate conflict between itself and application provider partners.

"The sense is that Microsoft will expand its application base (so there are) hundreds or thousands of ISVs that will likely face competition in the form of Microsoft--if not now, then in the future," Mills said.

Microsoft's general manager of ISVs, Mark Young, said that the company's business model does still allow other application providers to work with Microsoft. Partners can customize Microsoft's enterprise resource planning and customer relationship applications, much as third parties build specialized applications using Office, he said.

Young said Microsoft has not yet seen a significant impact from IBM's push into small and medium size businesses (SMBs) through partners.

"The last few years, IBM has had this new focus on SMBs and ISVs. We haven't seen anything yet," Young said. "They say they have 200 ISVs signed up for their program...(but) five to ten thousand is the number you need to be relevant because it's just so fragmented."

During this week's conference, IBM executives said that partners--which include hardware resellers, distributors, application providers and systems integrators--are a critical component in the company's push into midsize businesses and specific industries. The company plans to boost the amount of revenue it generates through business partners, which is now about $29 billion, or about one-third of its overall revenue.

 

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