Application Server Vendors Step Up Channel Activities

But Murphy, who has seen his share of market changes since founding the company in 1994, knows he can't afford to put all his business into one vendor's product. That's why digitalESP has been talking to BEA about opportunities around its WebLogic offering.

"We're not doing a lot of work today with BEA, but we've had meaningful discussions about working together," Murphy says. "We have a leadership position in the marketplace around Web services, and BEA has made a commitment to make that a strategic push on their part, so there is some interest in collaborating in that area."

As the application-server market tightens, vendors are racing to expand existing products to make them more developer-friendly. That's not surprising in light of the rise of Web services and the growing adoption of Java, XML and other software technologies. And as they increase the range of their offerings, vendors like BEA, IBM, Microsoft and even Oracle, are recognizing that they have to step up their activities with channel partners, including the ISVs and integration firms that build solutions based on their offerings.

In other words, they want to attract or, in IBM's case, retain the attention of key players like Murphy.

Gunning For the Lead

By most accounts, BEA's Java-based WebLogic offering is still the leader in the application-server space, with analysts giving it some 40 percent market share as of late 2001. But competition is increasing from players like IBM, Oracle with Oracle9iAS and more recently Microsoft and its .NET family of XML-based Web services products and applications.

Since starting the partner program around its WebLogic platform more than 18 months ago, BEA has signed up more than 2,100 partners, including systems integrators (SIs) and independent software vendors (ISVs) who base their solutions businesses on the application-server offering.

"We are really maturing as an overall organization and coming into our own," says Rauline Ochs, senior vice president of worldwide alliances at BEA. "We're not necessarily looking to grow our partner base. Instead, we're trying to ensure that our partners are profitable."

From an ISV perspective, BEA is trying to strengthen ties with partners who build and deploy horizontal applications that run on top of WebLogic, as well as those creating vertical solutions,companies like SunGard and F1 in banking, Manugistics, I2 and Yantra in manufacturing, or Amdocs and Neon Systems in telecom. Then it's up to systems-integration and hardware partners to package and deploy the client solutions.

While BEA has seen a lot of turnover in its channel, the company's strongest relationships are still with global integrators and ISVs serving the Global 2000 space. "Then we see a little drop until we get to our $40 million to $80 million partners, which would be regional or local integrators," Ochs says. "We're still doing excellent business with these folks,[companies like Cysive and Burntsand, who have been with us from the beginning."

Christian Pease, director of channel sales at Burntsand, says the benefit of working with BEA is that aside from its own application stack, the company has strong relationships with ISVs like ATG, which have chosen to build applications on top of WebLogic. "We have an option, as they build out their stack, to have a vendor-centric solution that we can offer, but along with that, [we offer a variety of other best-of-breed alternatives we can run on the WebLogic platform," Pease says. "That's a big advantage for us."

But IBM, armed with its WebSphere offering, has been building its own momentum when it comes to partnering in the application-server space. According to IBM executives, the momentum shift has been driven by the more than 6,000 certified partners who have already been trained on WebSphere worldwide. And when it comes to ISVs, the company saw a 160 percent increase in partners last year, with more than 1 million registered developers. Revenue generated by that group has jumped by a full 200 percent.

IBM officials cite the company's decision two years ago to drop its own application-development business as the key driver for increased ISV activity. "Two years ago, we were begging ISVs and partners to come work with us, and today we have thousands who want to," says Jocelyne Attal, vice president of marketing for WebSphere. "We have the trust of our partners right now, because we achieved most of what we told them we would do."

For Murphy, the main reason digitalESP stays so close to IBM is simple: The company is making big investments in its channel partners. The other reason is the potential relationship his company could have with IBM Global Services (GS), that is, if Big Blue ever manages to hash out a clear, consistent partnering strategy there.

Ochs and other BEA channel executives have focused some of their messaging on the perceived threat from IBM GS. They say BEA strives for partner harmony by limiting its own professional services arm to training, architecture design and mentoring, not full-scale solution providing. But while Murphy recognizes the potential conflict of working closely with IBM's $35 billion IT services giant, he also sees an opportunity.

"If we can determine how to make our skills complementary to IBM GS and develop a meaningful channel relationship there," Murphy says, "then IBM would become the most important channel relationship in the marketplace, not just for us but for any significant SI focused on the J2EE Java app server space,bar none."

Oracle, for its part, claims it currently works with a base of roughly 900 ISVs worldwide who build solutions on Oracle9iAS. While the company traditionally targets 14 different vertical areas with its solutions, Julie Tung, vice president in charge of global partnering at Oracle, says the top markets for the application-server offerings are financial services, telco, public sector, high-tech and life sciences.

Beyond vertical solutions, Oracle sees a sweet spot for Oracle9iAS in solution areas like portals, content management, business intelligence and even wireless. "I think if you only looked at it as an application server, we're really not doing 9iAS justice on that part," Tung says. "Our 9iAS solution is positioned as being the integration, the portal, etc. It's not just an application server itself."

The Race To Web Services

Application-server vendors' ability to take advantage of the quickly growing Web services market is clearly going to be key to their continued success in 2002 and beyond. So it's no surprise the companies are adding Web services development tools to their offerings.

BEA is rolling out a WebLogic Workshop application framework and run-time environment in a move to cozy up to developers and make it easier for them to write Internet programs in Java. The company is also releasing an integrated WebLogic Enterprise Platform that combines the application server, portal server, integration server and WebLogic Workshop into one product.

Weblogic Workshop is seen as BEA's first offering to compete directly with Microsoft's .NET strategy and its XML-based Web-services development tool, Visual Studio .NET. But Java-based competitors including IBM and Oracle call BEA's move a last-ditch effort by a company facing falling market share and desperate to become more than just an application-server vendor.

Scott Cosby, IBM's Web services marketing manager, calls BEA's WebLogic Workshop development tool a "late-to-the-game" strategy, noting that IBM unveiled its own WebSphere Studio developer tool in November and already has customers building Web services applications on it. And, late last year, Oracle debuted its JDeveloper tool, offering a single integrated development environment for J2EE-based Internet applications and Web services.

BEA executives, such as president and CEO Alfred Chuang, have said WebLogic Workshop could improve the application-development and deployment cycle by as much as 100 times. And they contend that while rivals have Java development tools, BEA has a complete integrated development environment and framework. Chuang has called that the next step in the evolution of simplified, unified application infrastructure tools for Web-services developers. And digitalESP's Murphy agrees, citing BEA's recent initiatives in Web services as the driver for his company's interest in talking to BEA.

Meanwhile, IBM is planning its latest push into the burgeoning Web-services market with the soon-to-be-launched Web Services on WebSphere. The program will accelerate the deployment of Web services and help partners integrate information, applications and business processes across the enterprise. IBM, which hopes to have 150 partners signed up by the end of this year, describes the program as a self-sustaining community for sharing technology and business strategies to build and deploy Web services on J2EE technology. It will include technical and business support, as well as an information and services portal for partners.

Going To Market

While Oracle executives are quick to point out that the company is consistently ranked first or second when it comes to pure technology, Tung is willing to admit that it has work to do in its go-to-market strategies to help partners increase profitability.

"A year ago, it was mostly that we would provide you with the tools and then you could go off and do it yourself," Tung says. "The go-to-market side is key for our partners now."

Oracle last year put into place a network of 10 channel marketing managers to drive go-to-market campaigns with partners. And the company unveiled its Web-based Oracle Partner Network to centralize support services for all of its ISV, systems-integration, reseller, hosting and service-provider partners. Membership to the network ($1,995 a year) gives partners access to developer environments and training workshops, sales and marketing support and avenues for networking with hardware providers and other potential partners. Oracle also made a decision earlier this year to eliminate its traditional framework of a separate partner organization to integrate partner support across the entire organization.

Despite Oracle's accomplishments, other areas can use improvement, including increasing education and awareness in the market. And then there's the systems- integrator community. Tung admits that for most of last year, Oracle focused on recruiting ISVs, giving integrators the short end of the stick. While Oracle currently has approximately 900 ISV partners working with Oracle9iAS, there are only some 100 systems-integration partners worldwide. Tung would like to see that number closer to 300.

"We need to concentrate on going after integrators," she says. "It's not just the Big Five because the Big Five, I think, are well aware of where we are in our solution and what 9iAS could do for them. It's about going down into the regional SIs."

Microsoft, however, is making some big investments in solution providers as a way to accelerate development around .NET. One example is New York-based Web services firm Razorfish, which recently received seed funding from the software giant to open a lab in Waltham, Mass., for the training, development and testing of .NET solutions. Another is Atlanta-based Extreme Logic, which last year became a recipient of Microsoft's generosity.

"They have a brilliant strategy of investing heavily in a number of key providers," says Razorfish CEO Jean Philippe Maheu, whose company has already leveraged the lab to develop and deploy .NET solutions for a number of clients in the financial-services sector.

Other solution providers, however, have voiced concerns that the proprietary nature of .NET is going to put it at a disadvantage to Java-based products from IBM, BEA and Oracle, which are generally seen by end users as flexible and open.

IBM says it will continue focusing on areas like demand-generation, increasing brand-recognition awareness and skills training to keep partners productive and profitable.

After hearing from partners about the need for more technical-enablement support, IBM instituted its WebSphere Innovation Connection last year to provide resources and support in areas like training, test drives, marketing and sales enablement, says Derek Bildfell, program director for WebSphere

market development. "That's a huge strength, and we have that being delivered across the world, not just at IBM's sites but also at business partners'," Bildfell says.

BEA has spent much time of late finding new ways to generate cross-sell and up-sell opportunities. Ochs cited two specific cases,one with an insurance client in Texas and the other with a Swiss bank,where BEA integration partners led with WebLogic and then leveraged BEA's Portal offering for a follow-up sale.

BEA Portal, which currently has more than 50 partners, is just one example of how the company is tying proprietary applications around WebLogic to give solution providers a full platform, says Ken Goldberg, senior director of business development at BEA.

"The message about an enterprise platform rings true for our SI partners,one vendor, one platform. It's easy to get up-and-running and is much easier to sell to their clients," he says.

That strategy also includes linking BEA partners with internal sales teams, as well as third-party vendors, to help them generate more revenue together in specific geographies and vertical markets. "Now we're starting to hone in on those sweet spots to ensure we are providing more emphasis, more focus and field linkage within those verticals," Ochs says. "It's all about a greater refinement of what we're trying to do." n