PARTNERWORLD - IBM chief touts standards, mid-market push

FRAMINGHAM (03/03/2004) - IBM Corp. is continuing to step up its efforts to develop technologies aimed at midsize companies and tailored to meet the needs of specific industries. At its annual PartnerWorld event going on this week in Las Vegas, IBM has its most senior executives, including CEO Sam Palmisano, spreading the word to its business partners.

Business partners are very valuable to IBM: The 90,000 companies that make up IBM's network of resellers, distributors and independent software vendor (ISV) partners are responsible for US$29 billion - or about one-third - of Big Blue's 2003 revenue.

Specifically, partners made or influenced 60 percent of IBM's server sales, 23 percent of its software sales, and 50 percent of its sales to small- and midsize businesses, said Palmisano, who spoke for an hour Monday to 5,400 PartnerWorld attendees. "You're one-third of the IBM company," Palmisano said of IBM's partners. In return, IBM spends about $2.4 billion each year in support of its partners, Palmisano said.

He stressed that partners need to be aware of what customers want: integrated, standards-based systems as opposed to the proprietary, piecemeal technologies of the past. "The client is insisting on simple, standardized approaches. They no longer want to be the self-integrator," Palmisano said.

Palmisano also impressed on partners the importance of aligning with IBM's movement to standards-based technology. "You have to commit to our point of view. You have to commit to open standards as a future computing model. If you do that, we will invest with you to help you become more successful," Palmisano said.

He was cautiously positive about today's operating environment. "Things are better, people are more optimistic," Palmisano said. But despite the improving economy, it remains critical that companies stimulate growth in the IT industry, he added.

One way IBM partners can stimulate growth is to free up customers' IT resources, which today are consumed by mundane integration work. If the integration burden is removed, customers can focus on more strategic development projects to drive their own revenue growth, which in turn will spur IT spending. "That's what standards portend," Palmisano said.

On the topic of On Demand, IBM's ubiquitous utility-computing initiative, Palmisano acknowledged that there was confusion when IBM first introduced the On Demand concept 18 months ago. Today, however, the On Demand approach resonates with customers, said Palmisano, who met face-to-face with 164 CEOs last year.

On Demand is not any one technology, Palmisano said. Rather, it's about the fusion of technology and business process - linking a company's business processes internally and with its partners, implementing a standards-based infrastructure, and providing a secure, flexible way to buy capacity, he said. "Clients want more flexibility in how they procure their infrastructures," Palmisano said.

Knowing what they want and implementing it are two different things, however. While companies now understand the concept of On Demand, many still don't know how or where to begin implementing it, Palmisano said. That's the challenge for IBM and its business partners.

Within IBM, Palmisano touted key new innovations, such as its Blue Gene supercomputer and Project Symphony family of resource allocation tools. He also highlighted $6 billion worth of recent IBM acquisitions which include PwC Consulting, application development tools maker Rational Software, database vendor Informix, and about a dozen other companies.

"We don't buy companies for revenue, we buy for capability," Palmisano said. Consequently, IBM has the strongest lineup of products it's had in the 31 years since he joined the company, Palmisano said.

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