IBM Pricing Help Offered to ISVs Pursuing Cloud

By Jessica Davis  |  Print this article Print

IBM is looking to help make it easier for ISVs to provide cloud services to end customers through a few new pricing and financing programs that let them pay for services the same way customers do -- as they go.

Looking to make it easier for systems integrators and ISVs to provide cloud services, IBM is offering two pricing and financing programs that will enable them to pay for services the same way customers consume them -- as they go.

For SAAS providers that offer IBM software in their monthly subscriptions to clients, IBM will offer those partners a monthly rental subscription as well. IBM will also offer a zero percent financing program and deferred payments for business partners that are building clouds using IBM technology and services.

The offerings are designed to help partners avoid upfront capital expenditures often required to build out cloud offerings. 

"This new pricing model is designed specifically for SAAS solution providers to pay for the software as they go," Dave Mitchell told Channel Insider. Mitchell is director of strategy for IBM's software business partners. "We've heard this need for quite a while."

The cloud model makes it easier for startup ISVs to get in the game of offering their solutions to end-user companies. Now those that build on IBM software and technologies can achieve an even lower barrier to entry through the new IBM programs. And reseller and IT solution provider partners looking to add ISV services to their practices can take advantage of an easier financial transition.

IBM's first ISV to take advantage of the offering is CloudOne, a cloud-based provider of ISV development platforms that relies on IBM's Rational development environment. CloudOne's CEO, John McDonald, a former IBM executive, believes that IBM's approach to partnership in the cloud is one that's good for partners.

"To IBM's credit, they've taken a very clear approach to this and said we are going to offer cloud hosting space," he told Channel Insider. "We are also going to allow a flowering of different kinds of approaches and business models within our partner space to add into the advancement of what we are doing. That is unique."

And now ISVs can use CloudOne's platform to build SAAS-based solutions that qualify for the IBM program.

IBM's new partner assistance announced today builds on IBM's new Cloud Computing Speciality and IBM says it will help it achieve its stated goal of reaching $7 billion in cloud revenues by 2013. IBM points to numbers from IDC that say $45 billion will be spent on cloud-related technologies, hardware and software by 2013, up from $17 billion in 2009.

Cloud providers would normally have to buy for the peak of use and then run less efficiently the rest of the time. The new pricing model from IBM is more like a mobile phone bill, Mitchell said.

"We work with the ISV to create a baseline, writing a one-year contract and sizing the environment the partner would typically need," he said. "That becomes their annual commit. From there they can go up and down based on their usage. And it follows the cell phone model of the higher level you commit to the better rate you get."

IBM will also let partners pick from a selection of software products and mix and match to create the environment that is right for them. For instance, they may commit to a level of $10,000 per month for Websphere and DB2 licenses. But they can use however much of each they need to each month that adds up to $10,000 without committing to a specific amount for each software product, Mitchell said.

McDonald believes that IBM's flexible approach will help partners grow as cloud computing continues to develop.

"It's a bit of a wild west right now as everyone positions and decides how they will capitalize on this," he said. "That's why IBM's approach is so good. They said we are not going to restrict how this develops."

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com