• May 27, 2005
  • By Colin Beasty, (former) Associate Editor, CRM Magazine

IBM Partners With SaaS Providers

In a move to support the increased demand for software as a service (SaaS), IBM this week announced two new resources to help independent software vendors (ISVs) develop and adapt business solutions like accounting, human resources, and ERP in an SaaS model. Industry watchers say IBM's involvement may help springboard the on-demand market, which is expected to jump from $4.2 billion last year to $10.7 billion in 2009. "The announcements we're making [are] really about ISVs taking advantage of the SaaS opportunity," says Dave Mitchell, director of SaaS at IBM. IBM is working with two types of partners: ISVs already offering software via the SaaS delivery model and those looking to make the transition to the SaaS model. Facilitated by an IBM on-demand architect, IBM is providing its Software as a Service Transformation Workshop to educate ISVs about how to deliver SaaS applications, determine the right technical model, and how to build an SaaS solution. Many issues need to be addressed at the workshop, Mitchell says. "From a business perspective, a company needs to think about revenue recognition, compensation for your sales force, routes to market, and distribution channels. From a technical side, companies have to consider service delivery, billing, and user support." For people looking to research from the comfort of their own office IBM is offering its Software as Services Showcase, which provides an online directory that allows customers to search for ISV solutions that are available to them as a service. The showcase includes ISV solutions that span a range of available solutions. More than 40 solutions from 20 ISVs are currently listed in the showcase--all are IBM partners. After working with SaaS providers last year, IBM found it wanted to increase its awareness in the marketplace. "The other kind of partners we're working with are those ISVs who are already selling their software as an SaaS model," Mitchell says. "We're providing a portal for customers to come and choose from leading SaaS providers they want to work with. Once the customer chooses to go forward, they'll be working directly with the SaaS provider." Mitchell maintains that certain customer factors, such as reduced costs (especially with setup), reduced risks, and not having to enter into long-term projects and contracts, have been the driving force behind SaaS. He also maintains the customers' ability to terminate their service and move elsewhere if they're not happy is particularly attractive. "One of the great benefits of SaaS is it's really shifted the balance of power to the customer. It really puts emphasis on the providers to offer good services and applications functionality, and to continue to improve their products in order to remain competitive." Laurie McCabe, vice president of SMB insight and business solutions at AMI Partners, agrees. She says that companies, particularly in the SMB space, will continue to increase the demand for SaaS. "The interesting thing about this announcement is that IBM is really leveling the playing field for vendors in the SaaS area. They're formalizing their work with these SaaS providers into the overall IBM partner world system. Instead of having a one-size-fits-all program, IBM is now segmenting just like their other partner programs do." For some time IBM has provided SaaS vendors with technical, marketing, and business support, but most of it has been on a one-to-one basis, McCabe says. "This latest effort kicks off a higher visibility market awareness type of campaign that should help accelerate market consideration and adoption on a broader scale." Related articles: Big Blue Will Acquire Ascential
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