VARs Say IBM Software Strategy Is a Win for the Channel - Make-or-Break Decision
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With 3,000 customers on non-
IBM legacy
products and no WebSphere experience, Chadwick said the move to
IBM
was a make-or-break decision, but one that has contributed to his company
averaging 35 percent year-over-year growth for the past seven years.
"Back then,
IBM just had a reseller
program that was an OK program, but as a reseller, we were often undercut on
price by large software wholesalers," Chadwick said, and that fact led him
to focus on shifting his company's core competency to services, consulting and
integration.
When
IBM shifted to a software focus in
2004 and boosted partner rebates and incentives, Chadwick said it made a huge
difference for Prolifics. Adding incentives for partners who identified
and registered deals or who did extensive pre-sales work with clients took
Prolifics from a "very modest resale software products shop" to a
company that last year earned $18 million, Chadwick said.
In 2007, Chadwick said his company's
IBM
business showed 66 percent growth, and in 2008 he expects to beat that growth
number. He said focusing on software integration and SOA (services-oriented
architecture) is a forward-thinking strategy; as products become commoditized,
prices drop and margins shrink.
"If a vendor only gives you incentives on resale [of products or
software], then it just becomes a discount program, where customers go to a
reseller to get the cheapest price," he said. Wrapping services and
consulting around middleware and focusing on SOA is where the real revenue gold
mine exists.
Sam Fatigato,
CEO of Ascendant Technology,
agrees. "SOA is a big buzzword, but
IBM
is committed to open standards, and we feel it's not just hype," Fatigato
said. Working with
IBM middleware to
drive Ascendant's
ISV practice has allowed
the company to double in size each year for the past four years, and Fatigato
said in 2008 he hopes to grow
IBM business
to more than $100 million, despite economic fears.
"We feel confident that we're going to keep growing, even in this
economy and with IT spending slowing down," he said. Last year,
Fatigato said Ascendant made just under $40 million, and that 80 percent of the
solutions he crafts for clients are based on
IBM
components.
"We are really confident when we go work with a client that we aren't
restricted; we can help them with almost any challenge. We can put the
IBM
platform on top of anything—Microsoft, Oracle, you name it—and they can work
together," he said.
Big Blue’s shift toward a software-focused business strategy began when
IBM
sold its PC business to
China's
Lenovo in December 2004, said Hanny. Since then, the vendor has emphasized
the importance of open standards and of SOA to help customers get the most
value out of their existing legacy hardware and software, he said.
Hanny said
IBM's software strategy
attracted 10,000 new partners last year.
