IBM's small business programs respond to Microsoft threat

By investing $500 million on solutions and marketing programs that target medium-size enterprises, IBM hopes to capture a portion of the technology infrastructure market that historically has been dominated by Microsoft.

IBM's midmarket ambitions currently revolve around two programs. One, called ISV Express, is aimed at helping 300 independent software vendors tailor their applications to run on IBM technology. The second program, called PartnerWorld, offers technical assistance to smaller development firms and integrators seeking to build solutions atop DB2 Express, WebSphere Express, or Lotus Collaboration Workplace.

Additionally, says Scott Hebner, IBM VP in charge of software vendor alliances, IBM is differentiating itself from Microsoft by leveraging its vertical industry expertise. In manufacturing, IBM is targeting sectors such as automotive, electronics, and consumer packaged goods suppliers with vertical industry versions of some of its software products. For instance, in the CPG segment, IBM offers WebSphere Business Integration Express for Item Synchronization, which syncs supplier data with the UCCnet registry.

Aggressive pricing for these products also is a big part of IBM's midmarket strategy. "They blew the portal market right open when they released WebSphere Portal Express at $70 per seat," says David Marshak, senior VP with Boston-based Patricia Seybold Group.

Barry Levine, sales director at For Solutions By Design II, a systems integrator specializing in Lotus Notes solutions, says IBM also is offering better prices than Microsoft for e-mail and workgroup solutions.

With older versions of Microsoft's Exchange package nearing the end of their support life cycles, Levine argues that adopting Lotus would be a cheaper alternative than a migration to newer versions of Exchange, which also requires a migration to Microsoft's Active Directory. "IBM's products are integrated and they have a scalable migration path for older versions," he says.

Levine describes a Lotus migration at a building supplies manufacturer that needed a newer alternative to UNIX Sendmail. "IBM called us in, and we were able to show the solution," he says.

Levine's firm now is installing several hundred Lotus seats for this manufacturer, and he is convinced that "this is an account that we couldn't have gotten to before [IBM launched its midmarket initiatives]."

Brian Angle, a VP for enterprise vendor CMS Manufacturing Systems, says IBM's efforts are revitalizing sales for the iSeries platform on which CMS's ERP solutions are based. "IBM was always focused on building the best mousetrap," he says. "Now they seem to have realized that to bring in new accounts, they have to focus on supporting ISVs."

Marshak believes IBM learned that lesson from the people it picked up in its acquisition of Lotus, which was known for building partnerships with solution providers that added value to Notes. "A lot of people who came from Lotus have moved into IBM's small business and partner groups," Marshak says.