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Jacques Martin

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IBM Partners Produce Mutual Benefits

The elements that compose a successful relationship

Jack Martin, editor-in-chief of WebSphere Journal, recently sat down with Buell Duncan, general manager of ISV and Developer Relations for IBM.

WJ: How do you spend a typical day?
BD:
That's a very good question. Over the course of any given week, I spend a third of my time working with the IBM team developing initiatives and programs and considering investments to strengthen our relationship with the software community at large. I spend probably the majority of my time each week, over 50% certainly, working with software companies, with developers, and with the venture capital community.

WJ: When you say you work with the venture capital community, do you mean the outside VCs?
BD:
The outside VCs. We do spend a lot of time developing programs and industry-specific offerings across the world industry network. We are working with the different brands on strategic alliances with certain software firms, along with the SMB organizations for the ISV Advantage Program, which is very successful, as we reach local and regional software companies. When you talk about all the time I spend internally working across IBM, it is very important, Jack, to emphasize that although I report to Steve Mills, the mission of this team is global and it is across the company, meaning representing the systems group, software group, global services, and of course, the SMB organization.

WJ: That's an enormous job.
BD:
I wouldn't say that. It's a fun job, it's an exciting job, and what's most exciting about this job is the breadth, as well as the amount of time that you have to spend and that you want to spend understanding the requirements and the opportunities of the software firms themselves. I met with the CEO of Relavis, an IBM Business Partner yesterday. This morning I was on the phone with the head of the software business at CSC, Computer Sciences Corporation. Every day this job gives you the opportunity to work directly with outside companies.

What Is An ISV?
An ISV (independent software vendor) is a software company that creates products that run on another company's platform.

WJ: When you say you work with them, what does that look like?
BD:
Let me paint you the broader picture, if I can. As you know, we made a decision as a company five years ago to exit the application business.

WJ: Absolutely.
BD:
We made that decision because it was not in accord with IBM's overall strategy, and because frankly we had been at it in one form or another for a number of years. We believed that by building strong relationships with application providers we could be more successful than if we tried to pick a spot and do it on our own. IBM's strengths are around client relationships, around technology, and around our services capabilities. As the marketplace is increasingly looking for solutions, a key component of that solution is always going to be an application asset, so we started five years ago with the first strategic alliance where we made specific commitments to Siebel. They in turn made specific commitments to IBM in terms of technology enablement. For example, WebSphere is obviously a key element in terms of go-to-market coordination and activities together.

WJ: Very interesting.
BD:
Since that first strategic alliance five years ago, we have now done 2,500 customer engagements with Siebel. That's pretty significant, and we have seen our share of business associated with Siebel license revenue grow consistently year in and year out, versus our competitors.

We started with a series of strategic alliances with global leaders like SAP, Siebel, and i2, and then we expanded that into what is now approximately 100 strategic alliances with large software firms around the world. These companies include i-Flex, building technology solutions for the financial industry, and SAS, with whom we have a relationship in the health care/ life sciences space. However, it wasn't enough to have 100 strategic alliances because there are literally thousands of software firms that customers are interested in, and the solutions they bring to market.

Last year we introduced a program that works hand in hand with the SMB organization led by Marc Lautenbach. We launched the ISV Advantage Program where we focused on 300 of the top local regional ISVs around the world. These ISVs are leaders in the application space in their geographies such as Munich, Milan, Singapore, or Minneapolis. We've made commitments to help these ISVs technically migrate to IBM platforms - WebSphere and DB2, and we've seen our share of their business grow dramatically. In the past 18 months, 250 companies have joined this program and have signed agreements with us to lead with IBM in the marketplace, delivering the majority of their business on IBM platforms. Among these 250 companies in the ISV Advantage Program for SMB, we've seen their enablement on WebSphere grow. In 2003, 24% of these companies were enabled on WebSphere. In 2004, that number tripled to 78% of companies who have their applications fully enabled on WebSphere, and 96% of them, as we speak, are committed to doing that. We still have a few to go, but it shows you the kind of connection points that we are making with these companies. The theory is pretty straightforward that these application companies lead with IBM , if we work together in the marketplace. The more successful they are, the more successful we'll be.

That would suggest [if you added up the strategic alliances we have with approximately 100 global players, and in many cases those strategic alliances have an IGS or BCS (Business Consulting Services) practice assigned around them] that we have contracts with about 500 software companies around the world that are our partners of choice and we are their partners of choice.

WJ: Wow!
BD:
That's still not enough. There are thousands of companies, and every day we are finding there are new entrants in the marketplace. So, how can we reach a much broader number of software firms? In 2004, we launched the Partner World Industry Network Program. We will add five more industries this year (2005). This will be the flagship program that we will drive for the coming years. In the first eight months that this program has been in the market, more than 2,200 software companies have joined. When they join they have access to specific industry content and resources. In other words, the way we go to market with our clients in banking, health care, or any other vertical industry is that we provide the technical blueprints and roadmaps for enablement, and give them resources to help enable their applications to our technology like WebSphere, DB2, Lotus Workplace, and orchestration and provisioning from Tivoli.

One of the most important things we do, besides provide these companies with technical support and enablement capabilities, is offer them marketing benefits when they have completed the enablement and when they have their first customer implementation. These marketing capabilities include deep discounts on advertising. We have agreements with 220 publications around the world. Members of IBM Partner World Industry Networks who are enabled and who have customer references can get discounts in the 70-80% range on advertising their solutions with IBM in these publications. We have a demand-generation campaign and collateral materials that we make available to these companies.

Most important, what we do, in terms of the feedback we get, is provide the ability to connect these very small firms to the IBM sales force within our Business Partner organizations. So, when they have a lead or an opportunity, they are enabled on WebSphere and pSeries, and want to find out who to work with to close this and get help from IBM, we can connect them directly with one of our sales people or one of our business partners to close the transaction. We have seen some 200 sales connections take place already in just the last 60 days since that offer of programs was made.

IBM's channel strategy consists of a spectrum holistic approach, working with the global players like SAP and Siebel, in terms of getting more and more share of their license revenue on IBM platforms. We've been able to bring the technical and enablement support and go-to-market benefits to literally thousands of companies who want to partner with IBM.

Working with the venture capital community, we recently completed a tour of six cities around the world including London, Sao Paulo, Washington DC, Shanghai, Palo Alto, and Boston where we held roundtable sessions. For example, in Palo Alto, some 50 venture capital firms attended the session and each of them brought portfolio companies. We talked about ways in which we could get connected to build up solutions. We need to build out solutions for our customers, which involves working with ISVs and application providers. How do we get better connected with these ISVs, so we can go to market together and provide stronger solutions to the mutual end-user customer? As we do this, everyone wins. IBM is in a stronger position because of the breadth and strength of our solution portfolio, its access to market for the smaller startup software companies and of course, it benefits the VCs who are funding these companies.

The real beneficiary though is the end-user customer because of the breadth of the solutions that they now have available to them in dealing with IBM.

WJ: How do you choose a VC? How do you decide if you are going to work with a specific VC?
BD:
We have a dedicated team at IBM, Venture Relations, whose mission in life is not to go out and fund companies, but to work with the leading venture firms in the industry. We are interested in two things and this is very similar to our approach to working with ISVs. We are interested in those firms who are leaders in their markets such as Kleiner Perkins or Hummer Windblad Venture Partners. Ann Windblad was with us in Palo Alto for the recently held VC session. We're very interested in building stronger relationships with the leaders in the industry within their particular markets, and with those who have access to innovative technology firms that we believe will be complementary to IBM's effort. We are also interested in those companies that want to work closely with IBM, that believe as we do in the importance of open standards and in the value of a true partnership.

Several things set IBM apart from other companies. First, the way the market is evolving seems to be playing very much to our strengths. The primary fact that sets IBM apart is the total commitment to open standards. If you're an application company and you're writing an application, why would you ever write an application that runs only in a Windows environment when you could develop that application in a Java environment and it could be deployed in a Windows, Linux, UNIX, or legacy environment? IBM's complete commitment to, and support of, open standards (that means Java, Linux, and Eclipse) is something that is gaining real traction in the marketplace with our partners, including the VC community.

The second thing that sets IBM apart is that we are genuinely committed to partnering. We are not in the application business. We are not confused about whether we are competing or partnering. We built a strategy completely around partnering with not just one or two companies, but literally thousands of software firms.

WJ: I think it's undeniable that you have the biggest business partner program in the world.
BD:
What sets it apart is the fundamental belief in open standards, that's number one. Number two is the belief in partnering versus competing. Third, the feedback we are getting very consistently from the analyst community is that what we are doing with these companies goes beyond just providing technical support on the go-to-market side; it's unique. In other words, this idea of helping smaller firms in terms of sales connections, closing deals together in the territory, and helping them generate business sets IBM apart. Thus, due to these three items, we are gaining real traction right now in the marketplace.

WJ: What qualities must a company possess to be a candidate for a strategic alliance partnership with IBM?
BD:
First of all, we are constantly evaluating the needs of customers and thinking, "what are the solutions that best address those needs?" Solutions that our customers are interested in are a combination of world-class technology, services capabilities, and software applications. So each business - whether it is the banking business in IBM, the eServer pSeries business, the WebSphere brand business, or the SMB markets - is looking at the customers and the solutions that drive business opportunity. As a result, the ISV applications are critical in every case. We work with ISVs that have the leading applications in a given area. The given area may be for risk and compliance in banking or it could be in the area of health care and life sciences--specific applications for data mining. So, who has the leading application in that space, and who is committed to open standards in working with IBM to address those opportunities? Those are the two priorities.

WJ: When you look at the ISV Advantage partners, what do they have to have to be qualified to be there?
BD:
Frankly, what I just described to you regarding the leading application providers in their market segment, and who's committed to partnering with IBM and leading with open standards applies across all of our partners.

Also, if you were to ask Marc Lautenbach what companies he's looking for, the only spin he would put on it is their presence in the local market, so that he can connect his sales team locally with those ISVs.

WJ: So, correct me if I'm wrong, it sounds like what IBM has done is leveled the playing field for ISVs so that whether you are an enormous ISV or a local ISV, you can get all the benefits of working with the largest technology company in the world.
BD:
Correct! Obviously, we have larger investments around the larger companies. For example, we have competency centers in place that are physical centers with people staffing them for SAP and Siebel.

We also have BCS consulting practices dedicated to some of the largest ISVs, but the fundamental benefits in the capability to work with IBM are available for all, assuming two things. One, they embrace open standards and two, they have a solution or application asset that is a leader in their space.

WJ: So, what you are describing, correct me if I'm wrong, is an ISV starting out today that started as a PartnerWorld member. If they had an application that they wrote that got traction, they could leverage off the IBM scale. Is that what you are saying - that as they grow, you'll grow?
BD:
That is correct.

WJ: Could you describe from inception to somebody who's rockin' and rollin,' how you would see that happening for them?
BD:
For a company that we may be introduced to by a venture firm, what we are looking for is those companies that have solutions, not just an idea, but a solution that they have sold to at least one customer, and they want to tighten the relationship with IBM. What is it that they need to do?

WJ: Correct.
BD:
What they need to do is join Partner World Industry Networks, an initiative that 2,252 companies have joined in the last eight months. These ISVs will have access to our strategy to work in a given industry. They'll have access to a technical road map of what we are looking for in terms of the solutions enabled to our products that we like to take to market in that industry. We will provide access to our IBM Innovation Centers to help them migrate those applications. We will assign technical architects to work with them, to build their product road maps and then watch as their application is enabled to the appropriate technologies for that given industry, which would include WebSphere, as an example. Then we work together to drive demand for that solution.

How do we do that? Here's an example. There's a company called Vertical-i. Vertical-i is in the health care and life sciences space, and they ran a joint ad with IBM with the business partner logo and a joint ad with us in a publication called BioIT World. They were fully enabled on WebSphere and IBM eServer offering. We talked about their solution, got that out in front of tens of thousands of readers, and they were able to run this advertisement as an IBM Business Partner at a cost that was 70% cheaper than if they were trying to do it themselves.

Another example is a small company called RJS Systems, based in Minnesota, enabled on IBM technology. RJS had a business opportunity in upstate New York and contacted Sales Connections. We assigned an IBM salesperson and an IBM Business Partner to work with RJS out of Minnesota to close a business transaction with an insurance company in upstate New York. These benefits are available today to these companies, and as their success builds, they will be identified by Marc Lautenbach's team as a leader in their space in their local market and begin to get some of the benefits and the ability to join the ISV Advantage Program. The benefits include sitting down together and doing marketing workshops, jointly funding demand-generation campaigns, and working to track our success and to close more business together in the market.

We are being told by our partners, customers, and obviously by analysts, that IBM has developed arguably the most comprehensive set of programs and the ability to connect to ISVs of any company in the industry because of the momentum behind open standards and IBM's leadership there, and because of our commitment to the partner and our actually going to market with these companies, whether they be small, midsize, or large.

WJ: Right now, where do you see a shortage of ISVs; where is there demand for something, but there's not enough of them to go around? There are literally tens of thousands of innovative companies coming up with new solutions every day in the application software space. But what are the things you are looking at as you look ahead through 2005 and beyond? What is your focus going to be?
BD:
I would point out three things that we believe are very important for us as we move ahead. Number one, this is expanding the number of industries, so we'll announce new industries in the first quarter of 2005. In addition to expanding the number of industries we will increase our investments and our focus on the emerging markets' high-growth countries, in particular, China, India, Brazil, and Eastern Europe. There is an enormous opportunity for high growth and innovation in countries like India. Obviously, new software development is occurring. The development isn't just for the local market, it's also development that impacts the rest of the world, so we are going to increase our efforts there even further. The third area is one that I think is particularly exciting in terms of looking ahead, and that is the shift in the way software is delivered from the traditional license revenue model of most traditional ISVs to software as a service or a subscription delivery. I think that IBM can bring a lot to the table to help those companies that are looking at transforming their existing businesses from license models to subscription models, or those companies that are born on the Web and are starting as net native around the subscription delivery models from day one. They are looking for strong partners to help them drive demand for their solutions in the marketplace, to provide hosting capabilities, and again, who fully believe and embrace open standards and open source. We have a real opportunity to work with those companies as we are seeing such growth around software as a service.

WJ: So how do you measure all of this?
BD:
We measure it in terms of the share of business that we get working with these companies. For example. we've seen a 5% share gain in the past year on our servers associated with SAP. We've seen a 10% share gain of global services associated with Siebel's business. Those are examples of where we measure share of transactions in the marketplace. We also measure revenue associated with these partnerships, and we've seen very strong growth there. We believe the ISV Advantage Partners themselves, the local regional companies, drive over half a billion dollars of revenue for IBM because of these relationships.

Finally, when you look at the broader market, we measure through some very, very detailed research. We measure the consideration and preference of our ISVs more broadly, as well as who is their preferred partner. In the last 18 months, we have seen double-digit gains in terms of consideration and preference for IBM, while our data suggest at the same time the ISV community in terms of consideration and preferences is declining by a similar amount as it relates to Microsoft. Why is that? Because the market is moving to open standards due to the strength of IBM's product portfolio (again, WebSphere is the market share leader), and because of the set of programs and the commitment we have in partnering with these companies.

WJ: Final question. For the person just starting out, who has his or her application written and either has gotten the first customer or is reading this interview, where does he/she go to find out the first step to starting with you?
BD:
On one end of the spectrum are the global players, like SAP and Siebel and the industry leaders like Siemens. Then keep going down the spectrum to the ISV Advantage local regional ISV, and take it to the thousands of other companies who are bringing innovative solutions and technology to market, typically in an industry-by-industry approach. Hopefully what I have conveyed to you in the last half hour is how we cover that. Remember the question that I asked earlier, though? Who in his right mind would ever develop an application that runs only in a Windows environment?

WJ: Sure.
BD:
Shouldn't they have thought about that when they developed it in Java and wrote in multiple environments? The only reason a company would ever do that is because they don't have the availability of skills, and so when you play out this spectrum, I really want to emphasize what we've also done over the past several years to build up the relationship with the software development community through our developerWorks initiative. developerWorks lets us reach over four million software developers around the world. In fact, 4.5 million of the estimated 10-12 million software developers in the world have registered on developerWorks for content, skills, tutorials, downloads, and more information about XML Web services, WebSphere, and DB2. Building a tight relationship based on the skills, awards, and recognition of this site, is the industry-leading aspect of developerWorks.

We've also done outreach programs around the world. This year, we've had over 55,000 software developers attend two-day classes in China and India, in the U.S. and Europe, and in Latin America to build up their technical skills around IBM offerings and around open standards. Now, the last stop on this spectrum if you've got this picture in your mind is, it's not enough to work just with the professional developer community from client, customers, and software firms, but we are now reaching out to the universities. Our academic initiative focuses on course curriculum at the university level on a global basis to teach these fundamental skills around open source and around IBM offerings, again using WebSphere and DB2 as an example. When you look at this holistic view from end to end, you can see this is an investment that IBM is fully committed to across the entire corporation, and it's something that we've been asked for some time and we'll stay at it, because we believe in the end it has a very, very significant impact on the success of IBM's overall business.

What I really want to encourage our partners to do is to get connected, because what we are driving at so hard is building out a much broader portfolio of partners than we have today, because we believe that the business opportunities around on demand are there. I encourage them to go to IBM.com/ISV or IBM.com/developerworks.

Buell Duncan is general manager of IBM ISV & Developer Relations. He is responsible for IBM's alliances and programs with independent software vendors and solution developers. Mr. Duncan, a graduate of Vanderbilt University in Business and Economics, joined IBM as a marketing representative in 1975. He held various management positions, including general manager, iSeries; vice president, Sales, AS/400; general manager, International Operations, Worldwide Sales and Services; general manager, Systems Sales, EMEA; and general manager, Industries, IBM North America.

More Stories By Jacques Martin

Jack Martin, editor-in-chief of WebSphere Journal, is cofounder and CEO of Simplex Knowledge Company (publisher of Sarbanes-Oxley Compliance Journal http://www.s-ox.com), an Internet software boutique specializing in WebSphere development. Simplex developed the first remote video transmission system designed specifically for childcare centers, which received worldwide media attention, and the world's first diagnostic quality ultrasound broadcast system. Jack is co-author of Understanding WebSphere, from Prentice Hall.

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