VARs, ISVs Help IBM Take Root In Midmarket

Steve Giondomenica, president of Chouinard and Myhre (CMI), a San Francisco-based solution provider that targets the SMB market, said that his company has seen success by teaming up LakeView Technology's Mimix high-availability software with IBM hardware, and that IBM has been hands-on in helping CMI win deals by bringing the cost barrier down.

"Let's say I have a customer that has [IBM hardware]. IBM has a program where I can sell them a second system that is almost identical to that system, but because it's only going to be used for high availability, IBM prices it dramatically [lower]. That helps me convince the customer to go ahead and buy the hardware so that I can bring in the LakeView product," Giondomenica said. "If IBM didn't help me by offering that reduced second box, it would make my rep's sale to the customer that much more difficult."

The benefits go both ways.

IBM, Armonk, N.Y., has indeed seen growth as a result of its efforts to target the midmarket through ISVs. About 70 percent of the 60,000-plus ISVs that participate in IBM's PartnerWorld industry network target the midmarket with their software products, and 220 are part of IBM's ISV Advantage program.

Revenue influenced by IBM's midmarket-focused ISV Advantage partners jumped 42 percent year-to-date by the end of the third quarter last year, with software revenue climbing 70 percent.

"The driver of spending in the midmarket for a small or midsize business is predominantly the business solution. Companies are interested in acquiring packaged software to allow them to better connect with customers and suppliers, [which then allows them] to manage accounts," said Buell Duncan, general manager of ISV and developer relations at IBM.

For IBM to succeed here, it needs "a strong network or ecosystem of business partners, particularly with ISVs that we work with to reach that opportunity," Duncan said.

IBM hasn't always been as proactive in supporting its partners, some ISVs say. "IBM has been much more aggressive in the last couple of years in recognizing the value of the partner channel," said John Siniscal, president of Lansa Americas, a Downers Grove, Ill.-based application development and eBusiness software maker. "Just in the past six months, we've done two different lead-generation campaigns with IBM that have been pretty much at IBM's initiative."

Lansa is part of the PartnerWorld network and has benefited from the company's increased focus on ISVs. "We're very dependent upon IBM, and they have a pretty good business partner program for working with ISVs like ourselves," Siniscal said.

Solution providers, ISVs and IBM are all keeping an eye out for opportunity in the midmarket space.

On-demand software is expected to be one such growth area."One of the areas we're all saying will be a key driver in the future is Software-as-a-Service. We're seeing a huge increase in terms of those companies who are not just delivering their software in traditional license models, but now over the Web," IBM's Duncan said.

Last month, afterBot, a Norcross, Ga., ISV that makes Web-based business software for the retail industry, upped its profile as an IBM partner by creating a Web application for Dillard's Department Stores, Little Rock, Ark. The Supplier Connect solution gives the department store's vendors access to daily sales data.

AfterBot's software now runs on IBM's WebSphere Application Server, DB2 and Linux as the ISV recently moved its products from a primarily Windows-based platform to IBM's technologies.

Products from virtualization powerhouse VMware, Palo Alto, Calif., are another midmarket bright spot, according to CMI's Giondomenica. IBM has helped CMI here as well in a number of ways.

"I've got two large transactions that we're working on now with customers that involve IBM hardware, VMware and, obviously, CMI as a delivery vehicle. IBM has done a lot with VMware where I can resell VMware as an IBM SKU. I'm also able to configure it right into that solution," he said. In addition, IBM has helped him package support and maintenance contracts for customers.

Meanwhile, for smaller ISVs that don't have a national footprint, IBM's powerful marketing machine and technical support capabilities can be a boon to both their sales and status.

Lindsay Rumohr, client executive at electronic health records software maker BlueWare, Cadillac, Mich., said that IBM's ISV Advantage program has allowed BlueWare to expand its reach through funding for marketing and promotional copywriting in addition to technical support.

"They give us all kinds of support from things like training our developers and technology support," she said. "They give us so much visibility in the industry because as a small company it's hard to do it on your own. Being able to put the words 'IBM Premier Business Partner' gives us a lot of credibility," she said.