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2/22/2006
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IBM Revs Up Software As A Service Strategy

The company has announced programs to help attract third-party software companies to deliver their products as services based on IBM infrastructure.

Hoping to encourage more developers to deliver their software as a service, IBM Thursday announced a number of technical and educational resources along with new sales incentives to help them adapt their businesses to a services-delivery model.

Starting immediately, qualified business partners can get a 10 percent referral fee for handing over a lead to a developer with a software-as-a-service business that results in a deal. IBM will also provide business partners with access to its sales force to help close those deals more quickly.

"We are offering a lead-referral fee equal to 10 percent of the first-year revenues generated as a way to head off channel conflict. We are also trying to work helping partners who might be working with ISVs to help them get consulting and implementation services around this particular solution," said Mark Hanney, IBM's vice president in charge of alliances.

Some analysts believe the referral program should eliminate friction among potentially competing ISVs and partners.

"IBM has been aggressive in terms of financial incentives for companies that are part of their overall ecosystem. They are making the effort to ensure this will be something that attracts partners so they won't go looking elsewhere," said Judith Hurwitz, president of Hurwitz & Associates.

In a related announcement, IBM said it has formed relationships with Aptix, Success Factors and Corente, which have agreed to deliver their applications as services that will be based around IBM's open infrastructure and hosting environment offered by IBM Global Services.

Success Factors, a provider of Web-based talent management solutions, is using IBM's direct mail, telemarketing and technical resources to generate customer leads. In 2005, IBM also sponsored 50 percent regional trade shows for SuccessFactors' HR applications. Company officials with Success Factors said they have been able to generate 800 sales leads in less than a year.

One of the technical resources IBM includes is workshops run by IBM-enablement architects. These architects will help guide partners through many of the technical decisions they must consider in adapting their business models. The workshops include education and guidance on the architecture of software as a service and new coded design methods, such as Web services, services oriented architectures (SOAs) and security.

"These architects are there to provide advice on how to optimize a solution. You can't just take your app and assume it will work perfectly in a software-as-a-services model. If you want good performance as you switch over to a subscription-based model, you will need to rewrite your application," Hanney said.

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