IBM tests pay-per-use for Rational tools

IBM tests pay-per-use for Rational tools

IBM will try out a pay-per-use model in Asia for Rational software development tools.

IBM will try out a pay-per-use model in Asia for its Rational software development tools, part of an effort to make them more affordable and accessible to small companies, an executive with IBM's Rational Software division said.

The company plans to roll out a program in Taiwan next quarter called Rational On Demand, through which an intermediary organization will offer the Rational tools to small companies on a pay-per-use basis, said Vaughan Woods, director of Rational Software for Asia Pacific.

Other countries may follow, including China and India, he said. The company has no immediate plans to bring the program to Europe or North America, but Rational executives did not rule out the possibility for the future.

Pay-per-use involves paying for software on the basis of how much it is used, rather than buying a more traditional, unlimited-use license for each employee that uses a product. The model is better suited for smaller companies, which often add and remove software engineers during the course of bringing applications to market, Woods said. The Rational group's business comes primarily today from larger organizations, he added.

Rational has tied up with International Integrated Systems, (IISI), a Taipei-based company, to offer the new service, as well as training, to software companies in Taiwan. IISI is owned by IBM Taiwan and the Institute for Information Industry, an organization set up by the Taiwan government to help develop the local IT industry. The Taiwan government supports the new Rational program because it wants to help smaller Taiwanese software companies get up to the level of quality and productivity required to compete globally, Woods said.

Rational may also offer the program in China, followed by India, depending on its success in Taiwan, according to Woods.

"We are already talking to an organization in China about playing an intermediary role," he said, adding that Rational won't rush into other countries until it is proven that the program works. "We also don't want to cannibalize existing markets that buy our products," he added.

China, India, Korea, and Japan are the fastest growing markets for Rational, said Steve Robinson, Rational Software's vice president for worldwide sales.

If the program is extended to other countries, IBM won't necessarily have to own all or part of the company that acts as the intermediary, Woods added.

While the Indian software industry consists mainly of large, cash-rich companies with thousands of employees, the software industry in China consists primarily of smaller organizations developing software both for the domestic market and for export, Woods said. The Rational on Demand program is therefore better suited to China, he said.

IBM, in Armonk, New York, acquired Rational Software in 2003 for US$2.1 billion.

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