IBM Pricing Help Offered to ISVs Pursuing Cloud

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."