LAS VEGAS—IBM Tuesday will announce a new approach to seeking business partners in select industries.
At the IBM PartnerWorld conference here, Buell Duncan, IBMs general manager of independent software vendor and developer relations, told eWEEK that the company will announce Tuesday a new program to target key industries from which the Armonk, N.Y., systems giant will look to pluck new partners.
“Were going to seek to partner in key industries as opposed to going through the different brand programs [through IBMs five different brands],” Duncan said.
“Were going to announce five [industries] on Tuesday, another five over the next quarter and another five by the end of the year,” Duncan said. “So well have 15 key industry segments by the end of the year.”
Meanwhile, Steve Mills, senior vice president and group executive of IBMs Software Group, said, “I hope we finally get to the point where we have too many partners. There are thousands and thousands of companies that wed like to reach that we dont reach today.
“In a broad sense were trying to attract tens of thousands,” Mills said. “But realistically, we have 1,000, and we will likely add a few hundred more this year, but we will not be able to triple it overnight.”
As opposed to his systems and server counterparts, which garner a larger share of their revenue through partners, “for the software side were getting less than 30 percent of revenues from relationships with business partners. In my view that number should be 70 percent,” Mills said.
In contrast, Bill Zeitler, senior vice president and group executive of IBMs Systems Group, said, “Up to 60 percent of our business comes through business partners.”
And during his keynote speech here Monday, IBM Chairman, President and CEO Sam Palmisano said IBMs personal systems and servers group gets 50 percent of its business through partners.
Mills said IBM also makes money tweaking its software and providing tailored solutions. “No software, save for shrink-wrapped, goes in without some kind of support. What were doing is modifying and stylizing and adding to the middleware,” he said.
Mills said there are 62 uniquely branded WebSphere business integration solutions available.
Said Zeitler: “We decided were not going to be in the application business so we are focused on making sure these software [ISV] companies are successful.”
IBM last week announced that 200 ISVs had joined its ISV Advantage Initiative in the programs first year. The program, which started last year, has seen a whole host of ISVs commit to go to market with IBM for a majority of their business in the $300 billion small-to-midsize business (SMB) technology market. This includes many developers who have migrated from proprietary offerings to Linux and IBMs Express middleware for the SMB market, IBM officials said.
“What we want in our partners is for them to constantly improve their skills. We want thousands more partners,” said Mike Borman, general manager of IBMs Global Business Partner program.
Although IBM earned $29 billion through partners last year, “the majority of our investments are in the SMB space, and I expect that to grow faster. In the PC space, we plan on doubling our Express sales.” Express solutions are trimmed-down versions of IBM products targeted at the SMB market.
Next page: Is the SMB market too crowded?
Asked whether the SMB market was too crowded, Mills said, “Thats a problem I havent run into yet. The market is huge. There are 500,000 businesses and governments that represent the midmarket. Eight thousand businesses will buy a piece of IBM software this year who have never bought any before.”
However, Steve Ward, senior vice president and general manager of IBMs personal systems group, said, “In my space if you sell undifferentiated products its crowded.”
Duncan said, “One of the key points of differentiation is we build specific middleware offerings by industry. Where you see standards by industries, such as RosettaNet and others, we are building these into our products. Secondly, we have organized our sales and services by industry, and we are now aligning our ISV programs by industry.”
Duncan said IBMs ISV push into the SMB space has hurt competitors, namely Microsoft Corp.
However, Mark Young, general manager for ISVs, Platform Strategy and Partner Group at Microsoft, said, “I dont see that. In fact, our ISV ecosystem across every segment is healthier than its ever been. Weve built our products first and foremost for the SMB space. Its such a fragmented ISV landscape that weve always known it was the right way to go there.”
Moreover, Young said, IBM makes “apples and oranges” comparisons to Microsofts definition of just what constitutes the midmarket. He said IBMs definition of the midmarket includes many companies that are much larger than Microsofts typical SMB partner.
In addition, Young said, Microsoft views IBM as more competitive with its SMB partners than is Microsoft—ironically, a charge IBM puts to Microsoft.
“Almost two years ago we started industry solutions groups and were recruiting ISVs in different industries,” Young said. Yet, for IBM, “on the software side they are going to increase the amount of vertical software theyre doing. Seems like theyre going to compete with their ISVs because the bulk of ISVs are vertical.”
“I met with Accpac [International Inc., of Pleasanton, Calif.] recently, and they have moved their business to DB2 and Linux as opposed to Microsoft because they are increasingly seeing Microsoft as a competitor because they compete with Great Plains,” Duncan said.
Both Microsoft and IBM announced partnering opportunities and solutions for retail ISVs on Monday.
“Our actions throughout the year indicate the importance SMB means throughout the IBM company,” Duncan said.