IBM targets vertical markets with ISVs

Taking its vertical industry approach to independent software vendors, IBM has begun working with them to build products that meet specific industry needs. It's also attempting to expand its services reach by having hardware resellers offer IBM services along with their servers.

These efforts, outlined at IBM's annual PartnerWorld conference last week, mean that customers will likely see more software vendors pitching products in the context of IBM's industry road maps. And hardware vendors will also be able to give customers the option of letting IBM host the hardware at one of its service centers.

IBM officials said they're not trying to lock in independent vendors to the company's platforms and note that pushing vendors to write to open standards means users may actually find it easier to mix and match competing offerings.

"It's portable code," said Steve Mills, senior vice president and group executive of the IBM Software Group, who argued that vendors can easily port the code to other systems, such as from WebSphere to Bea Systems Inc.'s WebLogic, "in hours."

"There is no lock-in. Our business is rendered vulnerable by any competitor" who can build around the standard technologies, Mills said.

Nonetheless, IBM officials are hoping that tighter integration by ISVs and hardware vendors with industry road maps and products such as DB2 will boost sales at the expense of its competitors. Independent vendors that embrace this model will become more tightly integrated into IBM's sales and global services marketing muscle.

IBM said the industry-specific program, which it's calling the PartnerWorld Industry Networks for ISVs, will initially cover six industries: banking, financial markets, health care, life sciences, retail and telecommunications.

Vendors that are part of effort said they don't feel pressured to join.

"I don't feel it's a David-and-Goliath relationship, where my arm is being twisted to necessarily push IBM hardware, for example, in a deal," said Christopher Cabrera, senior vice president of operations at Callidus Software Inc., a maker of enterprise incentive software management in San Jose.

Officials at Leapstone Systems Inc. said the telecommunications software company will gain from IBM's approach because it will be able to sell its offerings in the context of IBM's road map for the telecom industry. Leapstone is behind that idea, said Paul Shaneck, vice president of sales and marketing at the Somerset, N.J.-based firm.

Another way IBM is working to expand its reach is by having its hardware resellers sell their products as services. One vendor, Jim Torney, president of Essex Technology Group Inc., is doing just that.

The 9-year-old Rochelle Park, N.J. company has been a reseller of IBM's various server lines to small and midmarket customers with less than US$700 million in annual revenue. But last year he began selling hardware as a service. Instead of the hardware going to a customer's data center, it's hosted in a IBM global services center with the customer working on a pay-as-go model.

Even though IBM is hosting the server, many customers are still buying the hardware, and Torney believes it's because IT staffs at these firms "are used to controlling their own destiny E and want to own it for now."

Torney believes offering hosted services as well as hardware sales will expand his reach. "This gives us more at bats at other industries," he said.

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