IBM Exec Says SMB Markets Are Core To ISV Alliance Efforts

middleware software ISV SMB

How is IBM working with ISVs to drive business to SMBs? How many of the alliances are aimed at that under-100-seat market?

Hanny: I think we've been quite successful working with ISVs that are specifically building apps in that space, getting them to embed our technology and allowing the ISVs through their channel partners to deliver the total solution, both their application and our middleware. I think that approach is the most effective [because] when you get down to that size customer, they just want you to remove complexity. I'll also tell you that their channel partners like it and the reason their channel partners like it is there's actually more revenue for them now. Because, think about it, their channel partners are VARs. With us putting all the middleware in and making it a little more robust, they're going to sell a bigger deal because everything's there, they don't have to go buy a database or buy a Web apps server or buy the piece components. And since it's already integrated we help the VARs through some of the complexity that they might have had to face. At the same time someone has to be able to go in and install it and do some level of customization, so the VARs have been able to build a nice healthy business around this. And, by the way, the VARs can show a very quick ROI to their customers.

What's happening among your ISV partners as far as adoption of software as a service is concerned?

Hanny: Software as a service clearly is moving a lot faster than I thought. It looks like even Microsoft is starting to get excited, or is at least talking more about SaaS. We now have over 150 ISVs that have built their application in the SaaS model. And the majority are targeting SMB customers. That's another way that we're seeing how people have been able to put together some good solutions. [ISVs] are very aggressively using partners because even with a SaaS model, someone has to implement, customize and integrate [the hosted software]. I wouldn't underestimate the SaaS model. I didn't think it would take off as quickly as it has.

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What is your organization doing with the IBM Express products and what kind of market penetration are you seeing with them?

Hanny: The Express model [gives] smaller customers the functionality they need, but at the same time takes away some functions they don't require and allows a much quicker implementation. The Express offerings are absolutely crucial. Most of these [ISV partnerships] we're talking about today are working with the Express portfolio. I know there's been a very huge uptake in the ISV community.

Also, the [service-oriented architecture] and open-source software model has really become a big deal. It's interesting when you think about these ISVs that are focused more on serving smaller customers, who didn't really have much of a relationship with us to begin with, are all looking at [IBM's] portfolio and they're pretty excited about it. I think all of [the ISV partners] are SOA-enabling their applications because they see the value that SOA can bring. It's just the ease-of-integration, the business flexibility. That's what is really making a difference.

What does this overhaul of IBM's SMB sales mean to you within the alliances group?

Hanny: I think what we're trying to do is reduce the complexity for the partner. We're getting it down to one person and one point of control that can go out and represent IBM. One of the criticisms we've heard is that [channel partners] don't want to deal with too many people from IBM or I don't want to go brand by brand. I think it's a good step in that the more we can centralize the team and have one point person going to these partners and representing the IBM portfolio, the better it will be. I would perceive it as IBM listening to the partner community. I think this is a win for the channel, in my opinion. It convinces the various IBM brands like [Series] x and i and p [servers] and storage that one person can go in and represent us and build the relationship.

Is IBM really going to compete in the SMB market against the likes of Microsoft and other vendors?

Hanny: I'll take your question from the perspective of the VARs. What we're showing them is that there are great opportunities in these key emerging solutions. The best one, off the top of my head, is business intelligence. We've been working to pull together some BI solutions, not just for the enterprise, but we've put together BI solutions for the SMB space. There's a lot of hot areas right now. Unified communications is real hot space right now. Product life-cycle management is another hot area. Supply chain management is another.

We're going at it industry by industry, so we've put together very specific solutions in financial services, healthcare and in retail. We need channel partners and the channel can make a tremendous amount of money. We're trying to help the channel figure out how they are going to align on these solutions, how they're going to get trained, what kind of target customers we're going to go after. They're going to be able to add services capabilities.

I think the best opportunity for our VARs is to [move] up to a solution focus. The guys who are starting to make the switch, the people who are starting to figure out how to sell the solution and build up a services organization, they're doing very, very well. And the people who continue to rely on fulfillment are going to struggle, in my opinion.