IBM Makes Inroads With Vendor Partnership Strategy

Earlier this year, IBM announced that its joint sales revenues with mid-market independent software vendors (ISVs) reached US$1 billion worldwide.

This is just one measure of the success IBM has realized in the SMB partner strategy it launched in 2002, finds a new report by Access Markets International (AMI) Partners.

“It is interesting because here we have a major IT vendor that is trying to compete in the business application area but doesn’t own its own business applications,” says Laurie McCabe, author of the report, and AMI-Partners’ U.S.-based vice president for SMB insights and solutions.

“It is certainly a different approach than what Microsoft and other business application vendors are doing, which is acquiring functionality like crazy,” she told CRM Buyer.

Depth and Breadth

IBM can also be judged a success for the depth and breadth of the mid-market applications it offers, notes McCabe.

The company has made a point of collaborating with mid-market horizontal and industry-specific ISVs that build applications on top of IBM hardware and middleware, or in conjunction with IBM services, she explains.

However, Big Blue still has room to improve in the SMB space, McCabe adds. “For instance, they haven’t figured out yet how to out-Microsoft Microsoft.” Indeed, Microsoft has its own formidable partner network.

Still, the potential for IBM in the SMB space looks good, mainly because the market is so fragmented.

“There are a lot of stealth vendors in the mid-market,” says McCabe, “and IBM is one of them. That is basically the make-up of the mid-market. At the enterprise level, there are three or four top vendors, and oftentimes the list stops there.”

CRM as Illustration

The CRM space provides a good illustration of the headway IBM has made with its SMB partner strategy, McCabe says. “CRM is a high-growth market, and it is an area in which they are doing everything they can to build out their partner network.”

IBM has many CRM partners, starting with Siebel, which it still works with, even though the company has been bought by Oracle. SAP is another partner, with its SMB Express Global Service offering.

“Then there are players that are not as well known but are expert in a particular vertical or geographical area,” notes McCabe. “It is these partners that IBM is banking on to help it build out market share in the CRM space.”