In the software industry, Microsoft Corp. may own the desktop, but IBM owns just about everything else. The Armonk, N.Y., company, which hatched its Software Group 10 years ago, has grown to become the second-largest software provider in the world, behind Microsoft. The reason, according to company executives and industry observers, is due almost exclusively to the groups intense focus on middleware development. Indeed, through the success of its brands—DB2, Tivoli, WebSphere, Lotus and Rational—IBM has been able to eschew the applications business and not only focus on but also dominate the middleware space.
As Ambuj Goyal, general manager of the companys Lotus Software division puts it, IBMs strategy is “middleware everywhere.”
Driving this strategy are the companys five brands, which are designed and positioned to allow customers to build, manage and run IBM software. Rational and WebSphere tools, for example, allow customers to build applications. Those applications can be run in the WebSphere, DB2 or Lotus environments and managed with Tivoli.
The strategy has worked well in the enterprise.
“Unlike the other players, IBM has an integrated tool set and strategy for building software for everything from a handheld to a mainframe, and all their tools will interoperate,” said Todd Williams, vice president of technology at Genuitec LLC, in Dallas. “No other single player has such breadth or vision, with the possible exception of Microsoft. In this economy, there is no stronger message.”
It is IBMs newest software brand, Rational, that is making the most news of late. This week marks the arrival of the first new release from the group since IBM completed its acquisition of Rational Software Corp. in February. Supporting the on-demand concept of effective resource utilization, Rational will introduce a new Architected Rapid Application Development solution for increasing the productivity of IT organizations by enabling them to leverage development resources.
The announcement includes new offerings that expand what Rational calls the Extended Development Experience enhancements to IBM Rational Unified Process. As a result, IBM will be able to deliver a more configurable process to a broader audience and upgrades to all tools in Rationals suite of products.
Mike Devlin, general manager of IBMs Rational unit, in Lexington, Mass., said Rational is now tightly integrated with the IBM-sponsored Eclipse open-source development platform and WebSphere Studio development tools. According to Devlin, IBM is also targeting more integration between Rational and WebSphere Application Server; DB2, for data modeling; Tivoli, for software configuration management; and Lotus, for collaboration software and portal technology.
Increasingly, IBM is mingling features of its tools to support the on-demand strategy and adding autonomic—or self-managing, self-healing technology—to products such as Tivoli systems management solutions, WebSphere Application Server and the DB2 database offering.
“I think of IBM Software Group as pursuing a strategy of world domination of application platforms and infrastructure,” said John Rymer, vice president of Giga Research, a unit of Forrester Research Inc., in Santa Clara, Calif. “Some of that is middleware, some of it is application servers, some of it is database servers, some of it is management. Pick a category, and [it] seems to have an entry.”
Rymer said much of the credit should go to Senior Vice President and Software Group Executive Steve Mills take-no-prisoners approach to the business. “He is probably the perfect guy for the difficult job of running the group,” Rymer said.
Although the formal IBM Software Group did not become so named until 1995, Mills said the division effectively began when he sent Janet Perna, now general manager of IBMs data management business, to develop a version of DB2 for Unix workstations to compete with offerings from Oracle Corp. (See interview with Mills.)
Perna said it wasnt until she moved into an executive position in New York and IBM decided to invest $1 billion on data management that the group really took off. So “by the end of 2000, we had surpassed everybody except Oracle,” she said.
Robert LeBlanc, general manager of the Tivoli division, said IBM took Tivoli from a $60 million company at the time IBM acquired it in 1996 and turned it into the $1 billion business unit it is today. “We build everything as a set of interchangeable components, and that gives us an advantage over every other software vendor out there,” LeBlanc said.
LeBlanc and Goyal said the componentization strategy is what will spur growth and enhance customer experiences by enabling IBM to integrate components of various products into other offerings.
“The best example of that is WebSphere Portal,” Goyal said. “There is the Web application server, repository from DB2, and teamwork and collaboration software from Lotus.” Future development tools from Rational will include software from Lotus to allow developers to communicate via instant messaging and enable more collaborative development, he said.
John Swainson, general manager of IBMs WebSphere business, said WebSphere came out of three IBM efforts he pulled together in the mid-1990s. Now the title is one of the top two products in the Java 2 Platform, Enterprise Edition application server space.
Swainson said Sun Microsystems Inc. introduced Java but did not address the server space with the language or the platform. So IBM pulled together and came up with some enterprise server solutions based on Java, which became WebSphere.
Mills said this kind of pluckiness exemplifies the IBM Software Group spirit. Although other companies, including Sun, had a leadership role in developing Java and XML, IBM has most successfully capitalized on the technology. “Sun didnt immediately see a business case for Java,” Mills said. “We did.”
Meanwhile, IBM is courting developers and has more than 2.8 million of them signed on to its DeveloperWorks developer network, said Buell Duncan, general manager of developer relations at IBM.
Nowhere is the battle for developers more important than in the small- and midsize-business market. Duncan said this market is important for three reasons: “Its a large market, its where more than 50 percent of IT dollars are being spent; its the fastest-growing market; and its where we have to stop Microsoft.”
The next area of opportunity for IBM Software Group is Web services, where IBM is taking a leadership role in driving standards, along with Microsoft. IBM Research is a big help in this space, having led the way in the development of several XML technologies, including XQuery and Simple Object Access Protocol 1.2, said Alfred Spector, vice president of software and services at IBM Research.
Barry Gilbane, vice president of business development for Nexaweb Technologies Inc., in Cambridge, Mass., said, “We signed on with IBM because we identified a strong fit with our product and WebSphere, and we felt this was the best go-to-market partner we could find.”
Eric Sherman, director of business development at Natural Messaging Inc., in Portland, Ore., another IBM ISV partner, said his company is in the enterprise IM space. “We saw IBM as an important partner to align with because they are the leader in enterprise IM,” Sherman said.
Customers such as Jim Glavan, IT director at Acuity Inc., in Sheboygan, Wis., swear by IBM because the systems company continues to lead. “We continue to stick with IBM software. … They are setting the pace, and other companies dont have the ability to offer the same thing,” Glavan said.
Kerry Grimes, chief operating officer at Rocksteady Networks Inc., in Austin, Texas, said one reason his company partnered with IBM is because “there is no other hardware company with the software and services of IBM.” IBM used to be closed and proprietary, “but now they have opened up and are very partner-friendly,” he said.
Even IBM competitors are fans. “I have a lot of respect for IBM,” said Alfred Chuang, CEO of BEA Systems Inc., IBMs chief application server rival.
But Chuang points out an ongoing challenge for IBM that the company must diligently manage.
“Theyve been a great competitor,” said Chuang, in San Jose, Calif. “But they have 340-some pieces of software bundled in WebSphere. How do they integrate all of that? Theres no magic; this stuff is hard.”
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