CZ: What about the demonstrable ROI you mentioned earlier?
Ouellette: Beautiful. First, the customer doesn't need to have a database administrator on staff. That's a very expensive salary that's avoided. And DB2 Express has been priced to sell; we're talking about $495 per server and $99 per user. That's much less than Microsoft's pricing [for SQL Server]. And it runs on Windows or Linux servers.
CZ: You keep referring to "Business Partners." Who are they?
Ouellette: They're called lots of different things, solution providers, systems integrators, or ISVs (independent software vendors). Some are very large, but many are small, as small as 35 people sometimes. They're not just resellers, but ISVs and regional systems integrator that take middleware and build applications and go to market with us. Some have relationships with Microsoft, and some do not. An important thing for us is that many are new to IBM. Our message, that IBM is no in the applications software business is resonating with these partners. They see us as a partner, not as a competitor. We are not in the apps business.
CZ: How does an interested developer become a Business Partner?
Ouellette: We have an organization within IBM that identifies ISVs as possible partners. And, of course, we have the PartnerWorld for Software Web site. Any solution provider, value-added reseller, integrator, consultant, service provider, or education provider can go there are find out the requirements for becoming a Business Partner and the benefits of being in the program. Once they make contact with us, we'll pick it up from there.
CZ: But there must be a point below which you'd consider a potential partner just too small.
Ouellette: Not really. Small companies can do great things. And they can move a lot faster than big companies. For these small partners we have the ISV Advantage program. We go out and select ISVs we see as important for vertical segments. Some of these are very small and even don't have a sales force. But they need someone to partner with, someone who can give them a sales force. We can do that.
CZ: What does IBM require from these ISVs?
Ouellette: Well, they need to build applications using IBM middleware. If they are willing to make a specific commit to IBM, they get co-marketing dollars and dedicated go-to-market resources. At end of 2003 we had 150 ISVs signing onto the program. We also have the Value Advantage Plus initiative. If you are a solution provider, local ISV, or regional systems integrator, and the majority of your revenue comes from the sale of applications they develop or services they perform, we will provide support in local markets supporting SMB. We launched this in May [2003] and already have more than 1000 partners signed up and the program is generating revenue. The partner has to contribute a minimum of 40 percent value add and has to provide customer success reference accounts.
Next page: What to expect in 2004
CZ: What can Business Partners expect to see in 2004 that they haven't seen before?
Ouellette: They are going to see a better level of consistency in IBMs commitment to the SMB market. We've been talking about this for a long time. It will be sustainable and aggressive. We'll reiterate how important SMB is to IBM. Expect to see announcements of new offerings and enhancements to existing programs. And we'll be making higher commitments to marketing and advertising. We'll be talking about these programs at our annual worldwide PartnerWorld conference in February.
CZ: Given the breadth of IBM and its very deep pockets, don't you expect to see some overlap with the channel that will create conflict with your partners?
Ouellette: No one is perfect. I am a little leery about possible situations with IGS [IBM Global Services]. We are working through our services strategy with IGS to minimize those situations.
CZ:
A parting message?
Ouellette:
Well, it's a pretty clear message: demand generation, awareness, advertising, accessible products for partners, and strong go-to-market support. We are launching aggressive ad initiatives that you'll be seeing soon. If a solution provider is looking for new opportunities, our SMB programs and Express Portfolio products make a compelling case.
Channel News and Analysis 
