IBM lures partners to sell hosted services

IBM Corp. will offer new incentives for partners to resell e-business hosting services, an attempt to help its hardware resellers to expand beyond the selling of systems, IBM will announce Monday at its PartnerWorld show in Las Vegas.

“Over the past year or so we’ve been working on a strategy to enable traditional hardware resellers to sell this new range of hosted solutions,” said Dev Mukherjee, vice president of marketing and strategy for e-business on demand at IBM’s Global Services unit.

So far, IBM has sold the bulk of its e-business hosting services through its internal sales force, but both IBM and its partners are interested in increasing the reseller participation, he said. “Partners have been saying they would like to get into this because, like IBM, they see this is the direction the market is going,” he said. Reselling these services gives the partners a chance to append their own complementary services to the IBM offerings, he added.

Mukherjee declined to say what percentage of sales revenue IBM expects its channel partners to generate eventually, compared with IBM’s internal sales staff. “What I can say is that we have seen a huge amount of interest from resellers, and we believe this package will make it easy for them to resell these services,” he said.

Asked to give a ballpark figure of how many partners IBM expects will be interested in and able to resell these services, Mukherjee said the program has been designed to appeal “to as broad a range of hardware resellers as possible.”

IBM will provide training and incentives to its partners interested in reselling e-business hosting services, such as security, computing capacity on demand and application services, he said. Incentives include an increase in commissions and signing bonuses.

“We’re providing training materials for them and sales incentives because we recognize resellers will need to train their sales staff to learn how to sell these new services and make some new investments themselves to enter this new age of hosted services,” he said. “We recognize this is a transition for them and want to help them as much as we can.”

IBM is particularly interested in seeing its partners reselling into the small-and-medium size business market (SMB), which IBM broadly defines as companies with up to 1,000 employees, Mukherjee said. To this end, IBM is rolling out a new managed hosting services offering tailored for SMBs. Called “Managed Hosting, Infrastructure Solutions With Server Management, Entry,” the program is modeled after those offered to large companies, including shared and virtualized network infrastructure, and optional multilayer firewall and load balancing features, but with a scope and price that are tailored for SMBs. IBM is also launching two new hosting services for SMBs based on its iSeries server platform.

Despite the focus on the SMB market, the sales incentives apply to all types of partner sales, including those made to large companies, he said. IBM will launch this first in the U.S., and plans to extend it to Europe and Asia-Pacific later on at a yet unspecified date, he said. The availability of the different offerings for partner resellers varies, but all will be available between now and the end of the second quarter, an IBM spokesman said.

IBM is also announcing Monday an expansion of an existing software-as-service program it launched in 2002 for independent software vendors (ISVs). That program, in which about 30 ISVs participate currently, allows participants to deliver their applications as a hosted service using IBM’s infrastructure.

IBM is now tweaking and enhancing the program, called the Application Enablement Program, by beefing up the technical and business support given to participating ISVs, he said. “ISVs have traditionally focused on the licensing model for selling their software, and software-as-service is a new model for them. It’s very new for ISVs, so we’re giving them both the technical and busines support to make it easier for them to make the transition,” he said.

IBM expects to double in 2004 the number of ISV’s participating in the program, he said.