IBM unveils plans to create global apps market for SMBs

IBM is trying to rally support for an online applications marketplace for small and mid-sized businesses that it plans to launch later this year. Big Blue hopes the initiative will help it generate more business from firms with 500 or less employees.

Last Thursday, it outlined plans to create the Global Applications Marketplace, where small businesses will be able to browse and purchase applications from potentially thousands of ISVs (independent software vendors) around the world, which local IBM channel partners will then install and manage for them.

Only about 10 ISVs have implemented IBM’s application programming interfaces (APIs)today, but the company expects to get many more.

IBM optimistically compared the marketplace to, because customers will be able to read reviews of products written by other customers.

It will also be like iTunes, in the sense that it will be tied to the vendor’s hardware: customers who use the marketplace will have to have an IBM server, just as iTunes customers need an iPod.

The goal is to make it easier for companies with small or nonexistent IT departments to adopt new software and services to help run their businesses.

For IBM and its partners it’s a way to generate more business from companies with up to 500 employees, a market largely untapped by IBM thus far.

The initiative, also called the Blue Business Platform, was announced Thursday at IBM’s Business Partner Leadership Conference in Los Angeles, where IBM pitched the idea to resellers and ISVs.

Competitors will include Microsoft’s Small Business Center, and, eventually, SAP’s Business ByDesign.

It will also compete with the Intel Business Exchange, which the chip maker announced separately on Thursday. Intel’s site offers bundles of software and hardware for SMBs, including applications from, Symantec, Microsoft, Doculex and Tripwire.

Small businesses will be able to search for applications at IBM’s marketplace and enter parameters like the number of employees they have. The system will spit back recommendations, including any IBM infrastructure software that might be appropriate. When the customer decides on an order, IBM sends it to a local reseller who will deploy and manage the software, said Matthew Friedman, vice president of marketing for IBM’s Business Systems Division

Success will depend on getting buy-in from ISVs and resellers. To take part, ISVs will have to adopt a set of APIs that allow them to list their software on the marketplace. Other APIs will support remote management capabilities, like the ability to add and remove users or deliver patches, and also allow for integration with other applications and services.

A reseller could connect an application to Amazon’s S3 hosted storage service, for example, but only if Amazon chooses to adopt the APIs, Friedman said. Longer term, IBM plans to release other APIs that allow for integration at the data level, allowing resellers to set up business processes, he said.

Vendors that signalled support Thursday include CFXWorks, which provides credit card processing for retailers; Cincom, which offers a business intelligence product; and InterNetworX, which sells enterprise resource planning software.

IBM expects most of the applications to be installed on premise, the model used by 90 percent of SMBs today, Friedman said, although some software will be offered as a service. The resellers will also be able to incorporate online backup services, he said. The remote management will usually be provided by the reseller.

IBM is setting up hundreds of “innovation centers” around the world where ISVs can go to add the APIs to their software. It is emphasizing the big role that partners will play, although in some cases customers will be able to download and install software themselves, Friedman said.

Most customers will want the specialized help that local resellers can provide, he said.

Alienating resellers is the main risk for IBM, said Dan Olds, principal analyst at Gabriel Consulting Group, in Beaverton, Oregon. Smaller resellers with little software expertise will benefit the most, he said, but bigger resellers may feel threatened that customers can now figure out what software they need online.

As a small business owner himself, Olds said the service sounds useful. “There are places you can search for applications, like Google, but you don’t really get all those choices in one place,” he said.

For companies with less than 50 employees IBM will offer Lotus Foundations Start. It’s a package of IBM’s Lotus and Domino software that comes pre-installed on a server and is supposed to provide for all a small company’s collaboration needs, including email, security, directory services, backup and recovery.

The product was unveiled at IBM’s Lotusphere conference in January. It will be generally available by the end of June, priced starting from about $1,500, Friedman said.

It will be the first of other “appliance servers” that IBM plans to release. IBM said it can be set up in 30 minutes and has “self managing” features to make it easy for small companies to use.

Big vendors have been trying for years to tap the SMB market, but have often struggled to meet the individual needs of small companies or come up with a viable business model. IBM said the global market is worth $500 billion, and called it its “largest opportunity for growth.”

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