When IBM revealed its industry strategy to its Business Partners at last week's PartnerWorld conference, the company did more than explain where it is going. It also announced programs that will enable independent software vendors (ISVs) to develop on IBM's industry middleware platforms and go to market with the computer giant. If those programs are successful, they could bring hundreds or even thousands of new solutions to mid-market customers and the iSeries server.
As I explained in my article last week, IBM is creating integrated middleware platforms that will address specific business issues for 12 industries. Each of the industries--banking, financial markets, insurance, automotive, electronics, retail/wholesale, consumer packaged goods, utilities, telecommunications, government, healthcare, and life sciences--will gain its own platform. Besides integrating middleware from across IBM's various brands, each platform will contain accelerator code, templates, adapters, database schema, and architectural guidance that ISVs can use to build vertical solutions on the platform.
Of course, IBM is not assuming that if it simply builds these platforms, ISVs will come. That is why the company used PartnerWorld last week to launch two major initiatives to get ISVs to embrace its industry offerings.
A Wider ISV Tent
Since the late 1990s, IBM has devoted most of its technical and marketing support to around 100 large ISVs that mainly cater to large enterprises. A year ago, however, IBM created ISV Advantage, a program to recruit and support regional ISVs that serve medium-size companies. Under ISV Advantage, a regional ISV commits to selling a specific percentage of its solutions on IBM middleware and servers. In exchange, IBM engages in extensive comarketing activities with the ISV and provides privileged access levels to its technical and sales support services.
At PartnerWorld last week, IBM expanded the mission of the ISV Advantage program and gave it a new name: ISV Advantage for SMB and Industries. As the new name indicates, ISV Advantage will continue to recruit regional ISVs that serve medium-size companies. Indeed, Buell Duncan--IBM's General Manager for ISV and Developer Relations--announced that ISV Advantage has now signed up 200 ISVs that serve this market. Under the expanded program, IBM will use ISV Advantage to recruit and support the leading industry software vendors. These vendors will agree to develop solutions on IBM's industry-specific middleware and commit to sales targets under terms that will be similar to those of their regional ISV counterparts.
While IBM will target ISV Advantage for Industries at the larger vertical ISVs, it will offer another program to all developers that create industry solutions. The program--PartnerWorld Industry Networks--will provide developers with technical and marketing support to create and sell vertical solutions with IBM's industry middleware under the covers.
At PartnerWorld, IBM launched both programs by unveiling ISV support offerings for six of its twelve targeted industries: banking, financial markets, retail, telecommunications, healthcare, and life sciences. According to Duncan, offerings for the remaining industries will be rolled out over the course of this year. The offerings include the following:
- Enablement blueprints. Developers will receive detailed guidance on how to use IBM's industry middleware platforms to solve specific business challenges that their customers face.
- Business insight services. To help ISVs connect with customers at the business level, IBM will provide advice on the issues that are affecting each industry. It will connect ISVs with its own industry experts and external consultants through publications and Webcasts.
- Industry networking. IBM will offer opportunities for knowledge exchanges through Web forums, conferences, and other venues.
- Sales and marketing support. Based on their level of commitment, industry ISVs will get opportunities to go to market with IBM through lead-generation programs, industry-specific advertising, and other promotions.
While IBM will extend these four offerings to members of both ISV programs, it will offer higher levels of support to members of ISV Advantage for Industries. Over the coming weeks, IBM will spell out the terms, conditions, and benefits of each program to the ISV community.
Are More Mid-Market Solutions Ahead?
According to sources inside IBM, the company is committing significant resources to recruit ISVs to its industry strategy. Already, IBM has mobilized teams in its Sales and Distribution and Industry groups to call on key software vendors. The PartnerWorld organization is also assembling field teams to help in the recruiting process. As one source told me, the goal is to recruit over 1,000 ISVs to the new programs within 12 to 18 months.
If Big Blue achieves this objective, the benefits for iSeries customers could be considerable. With its support for both OS/400 and Linux, the iSeries could be a target platform for many of the industry solutions that come from IBM's new programs. This could especially be the case in industries such as automotive and government, where the iSeries holds a significant market shares. However, the degree to which the iSeries benefits will largely depend on what IBM does to make its industry-specific middleware platforms run on the server. The company has yet to provide an answer to that question, though I hope to get one soon.
Regardless of what happens on the iSeries, one thing is clear: IBM is committed to recruiting more of the ISVs that serve medium-size companies. That will only increase the tension between IBM and vendors such as Microsoft and Oracle that want to capture this market for themselves. As a result, 2004 will be a pivotal year in which many ISVs and their mid-market customers will make "bet the business" decisions about their strategic software platforms.
Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology.
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