IBM Expects SMB to Rev Up IT Spending in 2004

"About one-third of IBM's overall revenue is generated through its worldwide base of 90,000 business partners," says Pamela Kaplan, Director of Worldwide Partner Marketing Programs, at IBM's Software Group. "In 2003, IBM invested more than $1 billion in partners worldwide, and we'll continue to do so."

For 2004, Kaplan is optimistic. It's not the enterprise market where IBM expects to see the most growth. Instead, IBM is focusing on the SMB market where the pace of growth is expected to skyrocket, Kaplan says.

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"The key to SMB growth in 2004 is the integration of customers with their suppliers," she says. But why is this trend occurring in the SMB space? In the enterprise area, this type of integration is largely complete. But that's not the case in smaller businesses, where IT spending has been reigned in for the last few years.

To support its business partners in selling into that market, Kaplan says IBM is driving consistency and ease of use of marketing tools across all product segments. "Across software, servers, and storage you'll see architectural design created specifically for these products to complement each other," says Kaplan. Web services and security are now part of the mix.

IBM's SMB market, companies with 100 to 1,000 employees, encompasses more than a half million customers that are spending in excess of $300 billion a year on IT solutions. "From a partner perspective there is lot of opportunity," says Kaplan. To leverage that opportunity, IBM provides sales services, technical resources, financing, marketing campaign design resources, product information, and more through its PartnerWorld Web site. In December, IBM launched expanded support for its software development platforms through a new outreach program and unified developer conference.

Express Portfolio
IBM provides SMB solutions tools to its business partners is through the Express Portfolio program. This series of channel ready products, targeting the small and midsize-markets, is designed to be modular, easy to implement and priced to be competitive.

Launching its first Express product in Nov. 2002, the portfolio now includes more than 30 offerings. The newest include WebSphere Business Integration, DB2 Content Manager, ERP Optimization Services, Product Lifecycle Management, and managed hosting.

As an added incentive, IBM instituted the Value Advantage Plus initiative. The idea, according to Kaplan, is to provide a financial reward for partners that integrate IBM middleware into software solutions. The program already has 900 members, a level that IBM plans to double by the end of 2004.

The financial reward is offered in two forms: as an additional discount from a preferred distributor to Business Partners that resell the IBM software together with their solution to end users, or as "influence fee" to Business Partners that do not resell IBM software with their solution but instead refer end users to IBM.

Not Alone
Like most major vendors with strong service organizations, IBM is looking to sign up new partners in 2004. But unlike others, like Microsoft Corp. and Computer Associates International Inc. which are making dramatic changes in their partner programs, IBM is IBM is comfortable with its direction in 2004.

"We are focusing only on partners that want to play an active role," Kaplan says. "We will provide a high level of support for them, depending on their level of interest and capability."

With its worldwide conclave of partners set to meet at PartnerWorld in Las Vegas in February, new products and relationship building opportunities will be on display.