IBM Targets Midmarket With ISeries ISV Push

The Initiative for Innovation is intended to expand the traditional partner focus at IBM that has been strongly tied to a limited number of large independent software vendors and tools vendors to include thousands of additional partners worldwide, says Peter Bingaman, VP of marketing for IBM's iSeries server platform.

"We are creating a 'no-ISV-left-behind' scenario," Bingaman says. "To date we have been working with a handful of ISVs and that leaves thousands of others trying to figure out how they can bring their applications forward."

Expanding support for ISVs and tools vendors, and transversely, iSeries customers, can help keep the momentum for IBM's penetration in the midmarket space, he says. More than half of all iSeries revenue in 2004 was derived from small and medium businesses, and IBM sees the midmarket, which it defines as businesses with 100 to 1,000 employees, as the sweet spot, Bingaman says. Also, 85% of iSeries revenue last year came through program partners, he says.

Intensifying efforts to grow small and midsize business accounts makes sense, says Ray Boggs, an analyst with IDC. In 2004, IT spending across all business segments was 4.2%, but the IT spending by small and midsize businesses grew 6.2%.

"It's been tougher to sell to big companies because they have not been spending as much," Boggs says. "For IBM, they've always had a more specific focus on the midmarket, as opposed to the entire [small and midsize business] focus you'll find at HP."

Expanded resources for iSeries ISVs include an Application Innovation Program. It includes a no-charge virtual loaner program and increased educational assistance. IBM also plans to add iSeries programs to Innovation Centers in the United Kingdom and the United States, as well as adding centers in China, Japan, Italy, France, and Australia.

A Tools Innovation Program is being launched to promote the creation of a larger number of tools products for the iSeries platform.

IBM plans to expand its traditional practice of inviting a limited number of partners for site visits at its Rochester, MInn., lab for annual road map updates, and "open it up to the masses," Bingaman says. Partners also will be eligible to receive up to a 70% discount for co-advertising in industry publications. Overall the effort will lead to more tightly coupled relationships among IBM, its partners, and its customers, and the creation of many more supporting applications and tools, he says.

"In the midmarket, customers are looking for a system that is going to fuel their business applications, and one that they don't have to pay attention to," Bingaman says.

That's exactly what Autumn Harp Inc., a manufacturer of cosmetics that are sold for rebranding, has needed, says Bruce Bove, information systems manager there.

"I am the IT department. I don't have a staff," Bove says. "I need something that once it's up and running doesn't take a lot of day to day maintenance." Bove worked with IBM partner Vormittag Associates Inc. in moving the company's infrastructure to the iSeries last year and now uses Vormittag to help with needed maintenance.

Vormittag maintains a network connection with the Autumn Harp infrastructure, and when a problem arises, Vormittag can immediately check the system and make repair recommendations. When modifications are needed, Vormittag generally charges an hourly flat rate, compared with charges of thousands of dollars the company had experienced when working with value-added resellers that supported its pervious infrastructure, he says. "That kind of support has been a huge change for us, and a huge positive," Bove says.

The iSeries servers are based on IBM's Power5 processor architecture. Early this week, the company also made a disclosure of a new chipset, code-named Hurricane, it's deploying in its x86-based xSeries servers.