IBM lures partners into selling hosted services

IBM lures partners into selling hosted services

IBM will offer new incentives for partners to resell e-business hosting services in an attempt to help its hardware resellers to expand beyond the selling of systems.

The company will announce the incentives at its forthcoming 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," vice-president of marketing and strategy for e-business on demand at IBM's Global Services unit, said Dev Mukherjee, said.

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," Mukherjee said.

Reselling these services gave the partners a chance to append their own complementary services to the IBM offerings, he said.

Mukherjee declined to say what percentage of sales revenue IBM expected 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 expected would be interested in and able to resell these services, Mukherjee said the program had been designed to appeal "to as broad a range of hardware resellers as possible".

IBM would 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," Mukherjee said. "We recognize this is a transition for them and want to help them as much as we can."

IBM was 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 1000 employees, he 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 modelled after those offered to large companies, including shared and virtualised 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, Mukherjee said.

Initially, IBM would launch thisin the US, and planned 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 varied, but all would be available between now and the end of the second quarter, an IBM spokesman said.

IBM is also about to announce 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," Mukherjee said. "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."

IBM expected to double in 2004 the number of ISV's participating in the program, Mukherjee said.

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