As expected, IBM Corp yesterday fleshed out its ISV partnering initiative, unveiling a strategy that will effectively see Big Blue cherry pick the best software vendors in each market sector and aggressively partner with them to co-market each others’ products and services. The move, unveiled by Bill Etherington, IBM’s senior vice president in charge of its sales and distribution unit, during a press conference yesterday, marks a departure from IBM’s strategy to date. Rather than go with a variety of best of breed vendors for each market – as has been the case in both the ERP and supply chain sectors so far – Etherington yesterday said that IBM would instead couple itself with a very select number of partners, throwing its weight behind those alliances, in return for the ISV agreeing to push IBM’s hardware and middleware offerings.
IBM is basically pulling the time-honored I’ll scratch your back if you scratch mine routine. The difference this time around, says Etherington, is that IBM is going to significantly pare down the ISV solutions it is trying to push in an effort to simplify its sales message as well as the cost of training its sales and support staff.
Five years ago, we felt that the only way we could go to market was with a top-to-bottom IBM solution, said Etherington. Indeed IBM has toyed with developing its own applications, but always found itself in direct competition with the ISV partners who account, either directly of indirectly, for the majority of its hardware and software sales. Back then, we did not do enough to partner with the ISV community. Now we are solidly on the partnership square, he said.
Under the new ISV program, IBM will try to sign as many deals as it can with the leaders in 18 different vertical markets and the various cross-industry markets like ERP, SCM, CRM and data warehousing that IBM sells solutions into these days. But rather than go with multiple partners, IBM is picking one vendor in each category that it will lead with on a worldwide basis. The leading vendor in each category, says IBM, will be the one that has the best functionality, the most momentum, the most satisfied customers and the most commitment to using IBM’s hardware and software platforms.
Linda Sanford’s Global Solutions marketing team will have the unfortunate task of sorting through IBM’s thousands of software business partners to identify who the leading e-business application vendors are in each industry sector. Trying to figure out which company will be the lead ERP vendor will be problematic because different ERP vendors hold sway on different IBM platforms. The focus is on specific measurable steps between IBM and ISVs that can be documented in agreements, said Bob Timpson, general manager of IBM’s Solution Developer marketing unit, adding that these deals will stand in stark contrast to the PR co-marketing agreements that have been the hallmark of vendor- ISV partnerships for decades and which, at least as far as IBM is concerned, don’t bring home the bacon.
IBM already knighted Siebel Systems Inc as its partner for CRM applications at the end of October, and signed a very similar deal with SCM market leader i2 Technologies back in August. It is unclear if that i2 deal will be scrapped and recast in the light of these developments; certainly Big Blue has signed other supply chain deals since then including one with Industri- Matematik International Corp (IMI) back in September. But it’s the partnership with Siebel that IBM is touting as an example of the kind of agreement it expects to sign with other ISVs in their fields of expertise.
Under the Siebel deal, the CRM vendor has promised to use IBM’s DB2 data base as its premier development platform and to use it internally to run its own business. Most significantly, Siebel has agreed to port its applications to all of IBM’s platforms – it is already running in beta on AIX 4.3.3 and will ship in March 2000 on RS/6000s as well as on S/390 mainframes. AS/400 support will come sometime next year, probably when IBM ships the I-Star AS/400s and the OS/400 V4R5 operating system. IBM can’t get Siebel exclusively on its platform, however, the CRM suite has already been ported to Sun’s Solaris and is expected on HP-UX 11.0 in the first quarter as well. It’s predominantly sold on Windows NT and will be supported on Windows 2000 Server when that becomes available.
Siebel, like i2 before it, will also integrate IBM’s portfolio of middleware – MQSeries, Tivoli, WebSphere, Domino, etc – into its CRM suites, and will recommend them to customers. In exchange, the 4,700 IBM sales reps that push software solutions will jointly sell Siebel 99 and Siebel 2000 with the CRM vendor. It is unclear if IBM will itself use Siebel’s products as a condition of the deal, but this is likely in this case, but unlikely in all cases given the fact that IBM is not in every business that it sells solutions into.
What all this means is that Siebel and IBM are effectively attached at the wallet, although the deal is by no means exclusive. IBM is only asking that Siebel lead with IBM technologies, make certain (unspecified) market share and revenue commitments and help it win deals away from Sun Microsystems, Hewlett-Packard and others. I would describe this as a watershed event, says Tom Siebel, the founder and CEO of the CRM vendor, in reference to IBM’s new partnering scheme. This will dramatically increase our ability to go to market, and will be able to give customers lower risk, lower cost and more rapidly implemented solutions.
Critics of IBM’s plan to partner tightly and selectively rather than going with several best-of-breed solutions in each industrial vertical will be quick to point out that many of the stronger vendors in their fields will be unwilling to make such a strong commitment to IBM, regardless of its access in the global boardrooms and prowess with corporate CEOs. Remember what happened to Lotus?
