IBM To Hone SMB Strategy With New Tailor-Made Products

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IBM Software plans to develop new products,some from the ground up,specifically tailored to its burgeoning small-business strategy, according to company executives.

Mark Hanny, IBM's vice president of software channel marketing, also said the company is seeing a return on its aggressive rebate strategy for its top contributors to the SMB effort, as demonstrated by the number of partners that have qualified in less than 18 months.

Hanny: IBM is developing middleware products specifically for SMB engagements.

IBM's Start Now Top Contributor Initiative was rolled out last year, when the vendor said it would provide cash rebates ranging from 6 percent to 18 percent to SMB-focused software solution providers. The program most benefits solution providers that sell at least $100,000 worth of IBM software annually to businesses with fewer than 2,000 employees.

IBM has enlisted 1,200 solution providers worldwide for Start Now, about 600 of which are in North America, Hanny said.

"In general, the program is pretty creative," said Jim Hunt, CEO of EYT, the Chantilly, Va.-based IBM solution provider formerly known as Ernst and Young Technologies. "I would call it at least marginally successful. They are fighting and marketing. Overall, the concept of Start Now, and the way they've framed it and run it through the channel, is both a pretty thoughtful and aggressive position to take."

About $2.6 billion of IBM Software's annual $13 billion in sales comes from the SMB segment, Hanny said. Those are sales that continue to move almost entirely through third-party solution providers, he said.

To boost its SMB revenue, IBM Software is developing new products from its four primary middleware lines that will be built specifically for SMB engagements, Hanny said. He declined to provide specifics, but over the past several weeks the division has said it would package DB2, WebSphere, Lotus Notes and Domino, and Tivoli software as custom-integration solutions.

Andrew Sweet, CTO at Perficient, a solution provider in Saddle River, N.J., said IBM would do well to follow up the success it has found with the WebSphere Application Server, which he called a "low-price alternative that fits the SMB space and can possibly be OEMed."

Such a product, he said, fits well with Perficient's focus on vertical markets including finance, energy and health care.

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