Enterprise software maker J.D. Edwards will begin integrating IBM's middleware software into its own products. J.D. Edwards' chairman and CEO Robert Dutkowsky called the pact "the most significant technology partnership in our 25-year history".
J.D. Edwards develops software such as ERP and CRM applications aimed primarily at midsize businesses. Its products traditionally need to be coupled with software from other vendors, such as databases from IBM, Oracle or Microsoft. Under the new IBM deal, J.D. Edwards will build IBM middleware, including IBM's DB2 database, WebSphere Application Server, and WebSphere Portal, into its own software applications.
The technical integration of the two companies' software will be completed by the end of this year and rolled out to customers over the next several quarters, executives said. The deal will push up the cost of J.D. Edwards' software, although company executives argued that customers will gain "dramatically more" software capability and save on integration costs.
Customers running IBM technology such as DB2 already comprise the vast majority of J.D. Edwards' installed base, and those customers will see cost savings over buying the software piecemeal, Dutkowsky said. But the integrated IBM-J.D. Edwards software won't preclude customers from opting instead to use third-party technology, such as a database from Oracle or Microsoft, and those customers could face higher costs as they essentially pay twice for the same functionality, he acknowledged.
IBM's professed commitment to open standards was a "key" factor in J.D. Edwards' decision to choose Big Blue for this partnership, Dutkowsky said. Financial details of the arrangement were not disclosed.
Given that the vast majority of medium-sized users -- a market IBM executives expect to be worth $US150 billion in three years -- are now demanding solutions that can be more easily integrated with both new and legacy products, executives from both companies see this deal as better positioning them to cash in on that lavish opportunity.
"About half of that [$150 billion in the next three years] spending will be driven by solutions. More and more mid-sized customers are simply demanding that these solutions integrate with both recently purchased software and their legacy platforms. We think this deals crystallises that goal," said Marc Lautenbach, vice president in charge of IBM's small and medium business unit.
"Mid-market customers typically have just one primary vendor for their enterprise solutions because it simplifies the buying, deployment, and total cost of ownership issues for them. I think this deal [with IBM] just enhances our value proposition with them," said Lenley Henaring, vice president of product management at J.D. Edwards.
Henaring added that both companies will have an integration centre where they can jointly "work out installation problems and fine-tune software for users so as to complete an individual integrated solution". This, he believes, is an important differentiator from Microsoft.
"This is another way customers can get a quicker path to added value," Henaring said.