Managing the Family Business

Looking at a big play, IBM is aiming new managed services at partners.

IBM is about to jump into the managed services business, moving squarely into the small- and midsize-business markets with services the company insists will extend the reach of its partners rather than create new competition.

Big Blue officials say they see a huge opportunity in this market and fully intend to take advantage of it through an optional offering for its partners.

"We are going to offer managed services through the Web as e-sourcing takes hold," says Ralph Martino, VP of strategy and marketing for IBMs Personal Systems Group. "Were going to offer everything from support to asset management. But were also going to be very careful not to compete."

IBMs jump into the fast-growing management services provider (MSP) market is not surprising. Analysts expect the demand for MSP services to grow as an alternative to internally run IT management applications. The MSP market is projected to grow to $10 billion by 2004.

MSP competitors say that IBM is on the right track. "I think this is absolutely something that makes sense for them," says Ed Taylor, president and CEO at Collective Technologies, a managed infrastructure provider.

Collective, for instance, is reaching out to resellers though distributors. It already struck deals with Avnet Hallmark and GE Access under which their VARs can resell Collectives backup and recovery services. Collective expects to extend its deal where Avnet partners can resell Collectives higher-end SLA-based managed services that offer three levels of services.

The first hint of IBMs intentions in the MSP arena came last October, when it inked a $450 million hosting deal with AT&T. The deal called for IBM to build hosting centers inside of AT&Ts infrastructure. The goal, say AT&T insiders, is to provide leasing, professional services, management and outsourcing for the small- and midsize-business markets.

As a follow-up, IBM Global Services last month launched a program in which business partners can remarket or receive referral fees for the companys co-location services. IBMs channel-ready offering lets partners tap Big Blue for space and bandwidth. IBMs allies also can add backup and recovery services as well as additional professional services such as server installation.

IBM can do "as much or as little" as the partner requires, says Rusine Mitchell-Sinclair, GM of managed e-business services at IBM Global Services.

IBM is piloting its co-location channel program with companies such as i9 Interactive, a Web integrator. The company plans to move 40 customers to an IBM hosting center from another co-location site over the next four weeks, according to i9 executives.

This story was reported by Ed Sperling, John Moore & Jerry Rosa.