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IBM Offers New Avenues For Partners To Resell SaaS Applications

IBM's programs are latest effort by IT vendors to develop new business models to sell cloud applications through the channel.

IBM is launching a new set of programs under which channel partners can resell the vendor's software-as-a-service applications and earn margins up to 30 percent of a customer subscription's value.

The plans, announced today at IBM's Smarter Commerce Global Summit 2012 in Orlando, include options for partners to resell SaaS applications hosted by IBM or to host the applications themselves. Initially the new programs will be applied to IBM's e-commerce applications and then be expanded to other IBM products.

Until now partners have been limited to reference-selling the IBM SaaS applications, earning margins in the range of 10 to 15 percent of a deal's value, said Mark Register, vice president of software business partners and midmarket, IBM Software Group, in an interview.

[Related: IBM Pledges Assistance To Partners Transitioning To New Business Models ]

"We're sure [the new programs] are going to go down very well in the partner community, based on the feedback we've had," Register said.

Vendors have been struggling to find the right model for selling their SaaS "cloud" applications through the channel. In July, for example, Microsoft outlined plans for the Office 365 Open program under which partners can buy subscription keys for the Office 365 cloud application set, sell them to customers and bill them directly for the service. That program is expected to become effective sometime before the end of Microsoft's current fiscal year in June 2013.

Starting in October, IBM will offer several ways for partners to resell IBM SaaS applications. Under the SaaS Solution Provider plan, partners can host IBM SaaS software in their own data centers and develop customer solutions for customers. Offered as an option under IBM's Software Value Plus program, participating partners must be members of the IBM PartnerWorld program and be authorized resellers or solution providers.

Under the SaaS Solution Broker program, partners can resell cloud applications hosted by IBM. They can work under a wholesale agreement, under which partners contract with IBM on such terms as sales volume, frequency and cost, and they set their own pricing and terms for customers. Or, they can operate under a transaction agreement in which IBM and a partner sell to a specific customer under agreed upon pricing and other terms.

NEXT: What Partners Can Expect From IBM’s E-Commerce App

Under all of the options, partners can earn up to 30 percent of a subscription contract's value, IBM's Register said. IBM also will continue the current referral program for partners who want to continue working with IBM SaaS applications under that model.

Initially the programs will focus on IBM's SaaS e-commerce applications, including Coremetrics, DemandTec, Unica and Tealeaf products. It also includes the new IBM Marketing Center software, which combines digital analytics and real-time marketing tools, which IBM also unveiled Wednesday.

Register declined to predict the volume of sales the new programs will generate. But, he said that over time IBM expects that SaaS sales of some products will surpass on-premise sales. He emphasized that the new models provide partners and customers with more flexibility and options for selling and buying IBM SaaS products.


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