Palmisano to partners: Count on SMB for growth

LAS VEGAS – The head of IBM Corp. says modest growth in information technology spending by small and medium businesses this year will offer the best bets for the company’s partners.

“”For you, it’s opportunity in consulting, integration

and infrastructure work,”” Sam Palmisano, IBM chairman and CEO, said at the opening of the company’s annual PartnerWorld conference. IT spending by small and medium businesses worldwide should be between six and seven per cent this year, he said.

Some 5,200 people, about 60 per cent of whom are IBM resellers, consultants and independent software vendors, have gathered here to hear the company announce new programs to attack the small and medium business (SMB) sector.

These changes include spending more on its SMB Advantage programs for resellers, enhancing certification of resellers and condensing its programs for independent software vendors.

“”You have to commit to our point of view and to open standards,”” he added. “”And if you do that we will invest with you to help you become more successful.””

The message is similar to one issued at last year’s conference, where SMB initiatives were also rolled out. A year later, Palmisano credited partners with being responsible for half of IBM’s revenue related to SMB sales.

But the bulk of his address dealt with the company’s so-called “”on demand”” strategy of having IBM and its partners integrate solutions and deliver systems and infrastructure so customers can take advantage of swings in processing demand when needed.

“”On demand is so important to get growth back into the information technology industry,”” he said.

After hoping that buying best-of-breed solutions would make their IT systems efficient, customers are demanding their applications be better integrated, Palmisano said, using better infrastructure and open standards such as Java, XML, SOAP and Linux.

And while IBM’s consulting business is getting a chunk of this work, Palmisano said partners can also get a slice by delivering applications and services it doesn’t have.

“”When we rolled out on demand a year and a half ago or two there was a lot of confusion,”” he admitted.

However, he insisted IBM has clarified the vision. Industry analysts weren’t quite as sure.

“”They’re still trying to put into action the old ‘on demand’ phrase,”” said Jeremy Davies, senior partner of British-based consulting company Context, after hearing Palmisano.

“”They’ve gotten better in getting a definition,”” which he described as giving customers the ability to respond to rapid changes in demand. “”But it’s still a bit like the movie ‘Master and Commander’ where you’re seeing the cannon flashes through the fog.””

‘On demand’ is called utility computing by some analysts, including, George Hamilton of the Yankee Group, who described it in a recent report as a grid of processing power, network capacity, internal resources and outsourced services.

“”Utility computing is still years away,”” he wrote, “”but implementing a management strategy that aligns IT with the business delivers value today.””

As Frank Gens, senior vice-president of research at IDC noted in a recent report, IBM along with Hewlett-Packard, Microsoft, Oracle, EDS and Sun are struggling to articulate utility computing visions. “”We see signs of a dangerous gap between customers’ understanding of and expectations for utility computing and suppliers’ ability to deliver,”” he wrote.

Industry leaders should underpromise and overdeliver, he advised.

The SMB program announcements made Monday, some of which did not including pricing details, will be rolled out this year.

IBM said it will broaden its collaboration with partners in the U.S. to resell the company’s hosting services to small and medium business. Initially, however, the program will only be available in the U.S.

It will also create a series of Business Partner Innovation Centres, operated by partners to showcase their solutions and services running on IBM hardware and software. Some of these centres will be part of the 38 WebSphere Innovation Centres around the world and the 159 TotalStorage Solution Centres. There was no indication if an innovation centre will be located in Canada.

There will also be an expansion of IBM’s application enablement program for independent software vendors, which helps adapt their applications as on demand services. These applications will be hosted by IBM and delivered to customers. Since launching the program two years ago, IBM says it has signed up more than 30 ISVs.

The company also said it will continue to add to its Express portfolio of software, which are based on its leading applications like WebSphere and DB2. The Express line is tailor for the SMB market.

Finally, resellers will be able to download for free IBM’s signature selling method (SSM) e-learning module, giving sales staff the same methodology used by IBM’s staff.

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Howard Solomon
Howard Solomon
Currently a freelance writer. Former editor of and Computing Canada. An IT journalist since 1997, Howard has written for several of ITWC's sister publications, including Before arriving at ITWC he served as a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times.

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