Lotus Gets Back To Its Roots


IBM, Lotus' parent company, is in the midst of a broad effort to regain momentum in worldwide SMB IT markets that are expected to total $550 billion this year. And it was clear at the recent Lotusphere conference that Lotus will be a critical element of that initiative. "I think we are one of the spearheads," Rhodin said in a post-Lotusphere interview.

At Lotusphere, the company debuted its Foundations line of hardware/software server packages -- leveraging the Nitix products -- that will be sold primarily through the channel to companies with fewer than 500 employees. Plans were outlined to develop a new line of Software-as-a-Service applications called "Bluehouse" that IBM will rely on solution providers to sell to SMBs.

Also announced were new programs and incentives for channel partners, including a 25 percent rebate when selling migration/upgrade services and a $3,000 credit for using IBM's "Sales Connections" Web site to close deals.

"Historically, it's been hard for small companies to take advantage of what IBM [Lotus] has to offer," Rhodin said during his Lotusphere keynote speech. And he acknowledged the importance of the company's channel partners in reaching those SMB customers. All this should be good news to Lotus' 11,000-plus solution provider partners.

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"I think it's long overdue," said Bob McCandless, CEO at Alphalogix, a Huntington Beach, Calif., solution provider. "It's about time Lotus got back to the SMB market and really engage there. I'm very on-board with the plan."

But others are skeptical the efforts are enough. "Lotus has been completely washed out of the SMB market," says Ron Herardian, chief systems architect for Global System Services, a Mountain View, Calif., specialist in collaborative applications that works with Lotus products. "Microsoft has been doing this for a decade. Lotus is late to the party."

Target, Microsoft

Microsoft is clearly the target of Lotus' initiative. Foundations is aimed squarely at the Microsoft Small Business Server, for example, and Lotus products such as Notes/Domino and Connections compete head-to-head with Microsoft's Outlook/Exchange and SharePoint.

Lotus executives, during and after Lotusphere, exhibited a fair amount of anti-Microsoft bravado. "I think we've let Microsoft run unfettered in this business for too long," Rhodin said in the interview.

"We believe the time is right to take the fight to Microsoft," echoed Timothy Kounadis, Lotus director of worldwide channel and SMB marketing, also in a post-Lotusphere discussion. At the show Bruce Morse, Lotus vice president of unified communications, said that in 2007, one-third of new customers for the Lotus Sametime unified communications application were Microsoft Exchange users.

Microsoft didn't sit still for all this. During Lotusphere week the company released a new version of its Transporter Suite for Lotus Domino, a set of tools for migrating from Lotus Notes and Domino to Microsoft products. And Microsoft said that a whole ecosystem of Microsoft partners had developed around doing just that.While much of the Lotus-Microsoft competition revolves around Lotus Notes/Domino vs. Microsoft's Exchange software, Lotus clearly wants to expand the battlefront with its other products, including Sametime, the Connections social networking application, the Quickr collaboration software and the free Symphony desktop productivity suite Lotus debuted last year.

Upgrades for nearly all the products, slated for debut throughout this year, were detailed at Lotusphere.

"With the [product] portfolio we have right now, plus the announcement of Foundations, you have probably one of the richest portfolios in decades," said Robert Wong, Lotus director of worldwide SMB, channels and SaaS sales, speaking to Lotus channel partners on the first day of Lotusphere.

But while he said sales of Lotus products through the channel are growing faster than direct sales, he exhorted channel partners to expand their sales efforts beyond Lotus Notes/Domino to the rest of the Lotus product line. "You need to move out of your comfort zone," he said. "Learn to link value across the product portfolio."

Some get the synergy. "There's now a nice, cohesive integration between their products," says Alphalogix's McCandless. His company does a lot of work with the Lotus WebSphere Portal and he sees ways to extend the value of his customers' portals by creating social networks based on Connections and Quickr.

Wong also pitched channel partners on providing hosted versions of Lotus products, arguing that they provide a recurring revenue stream that is more profitable over the long term than installing on-premise applications. And Lotus will rely on the channel to sell the Bluehouse SaaS apps, which will include on-demand collaboration and communications applications, to companies with fewer than 500 employees.

Channel Push

Lotus is adding more incentives for channel partners to make all this more attractive. One is a $3,000 credit VARs earn by using the IBM Sales Connections Web site to help close deals: The credit can be applied to telemarketing, trade show and sales pipeline-generation expenses, Kounadis said. Under the GameOn promotion resellers can earn a 25 percent rebate for providing products and services to convert Outlook/Exchange customers to Lotus.

Alphalogix's McCandless is particularly jazzed about IBM's Web-page syndication effort that lets channel partners project pages from Lotus' Web site, such as those with product specifications, onto their own Web sites. McCandless says that will save his company a lot of Web page redevelopment work.

As it turns its attention more toward the SMB market, Lotus expects to learn a lot from the 2,600 channel partners the company is acquiring through the Nitix buyout. Those solution providers generally sell to smaller companies than Lotus' current channel partners. "These guys are going to bring a lot to the table," Rhodin said.

Lotus is changing, branching beyond Notes/Domino into broader areas such as collaboration and social networking, and into new technologies like SaaS applications. The question is not only whether Lotus can do this successfully, but whether its base of channel partners also can change along with the company.

Said Rhodin: "The models of computing are evolving and the models for selling through channel partners is evolving as well."