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Can IBM Build a Strong Cloud Partner Ecosystem?

May 4, 2011 1 comment

Despite all of the hand wringing surrounding Amazon.com’s service outages last week, it is clear to me that cloud computing is dramatically changing the delivery models of computing forever. We simply will not return to a model where organizations assume that they will consume primarily their own data center resources.  The traditional data center certainly isn’t going away but its role and its underlying technology will change forever.  One of the ramifications of this transition is the role of cloud infrastructure leaders in determining the direction of the partnership models.

Traditionally, System vendors have relied on partners to expand the coverage of their platforms. With the cloud, the requirement to have a strong partner ecosystem will not change. If anything, partners will be even more important in the cloud than they have been in traditional computing delivery models.  This is because with cloud computing, the barriers to leveraging different cloud-based software offerings – platform as a service and Software as a Service are very low. Any employee with a credit card can try out just about anything.  I think that the Amazon.com issues will be seen in the future as a tipping point for cloud computing. It, in fact, will not be the end to cloud but it will change the way companies view the way they select cloud partners.  Service management, scalability, and reliability will become the selection standard – not just for the end customer but for partners as well.

So, I was thinking about the cloud partnership model and how it is evolving. I expect that the major systems vendors will be in a perfect position to begin to reassert their power in the era of the cloud.  So, I decided to take a look at how IBM is approaching its partnership model in light of cloud computing.  Over the past several months, IBM has been revealing a new partnership model for the cloud computing market.  It has been difficult for most platform vendors to get noticed above the noise of cloud pioneers like Amazon and Google.  But this is starting to change.  It is not hard to figure out why.  IBM believes that cloud is a $181 billion business opportunity and it would like to grab a chunk of that opportunity.

Having followed IBM’s partnering initiatives for several decades I was not surprised to see a revamped cloud partnering program emerge this year. The new program is interesting for several different reasons.  First, it is focused on bringing together all of IBM’s cloud offerings across software, developer relations, hardware, and services into a single program.  This is important because it can be intimidating for an ISV, a Value Added Reseller, or a systems integrator to navigate the complexity of IBM’s offerings without some assistance.  In addition, IBM has to contend with a new breed of partners that are focused on public, private, and hybrid cloud offerings.

The new program is called the Cloud Specialty program and targeted to cover the entire cloud ecosystem including cloud builders (hardware and software resellers and systems integrators), Service Solution Providers (software and service resellers), Infrastructure Providers (telecom providers, hosting companies, Managed Service Providers, and distributors), Application Providers (ISVs and systems integrators), and Technology Providers (tools providers, and appliance vendors).

The focus of the cloud specialty program is not different than other partnering programs at IBM. It is focused on issues such as expanding the skills of partners, building revenue for both IBM and partners, and providing go to market programs to support its partners.  IBM is the first to admit that the complexity of the company and its offerings can be intimidating for partners.  Therefore, one of the objectives of the cloud specialty program is to clarify the requirements and benefits for partners. IBM is creating a tiered program based on the different types of cloud partners.  The level of partner investment and benefits differ based on the value of the type of partner and the expectation of those partners.  But there are some common offerings for all partners. All get early access to IBM’s cloud roadmap, use of the Partnerworld Cloud Specialty Mark, confidential updates on IBM’s cloud strategy and roadmap, internal use of LotusLive, networking opportunities. In addition, all these partners are entitled to up to $25,000 in business development funds.   There are some differences.  They include:

  • Cloud builders gain access to business leads, and access to IBM’s lab resources. In exchange these partners are expected to have IBM Cloud Reference architecture skills as well as cloud solutions provider and technical certification. They must also demonstrate ability to generate revenue. Revenue amounts vary based on the mix of hardware, software, and services that they resell.  They must also have two verified cloud references for the previous calendar year.
  • Service Solution Providers are provided with a named relationship manager and access to networking opportunities. In exchange, partners are expected to use IBM cloud products or services, demonstrate knowledge and skills in use of IBM cloud offerings, and the ability to generate $300,000 in revenue from the partnership.
  • Infrastructure Providers are given access to named IBM alliance manager, and access to business development workshops. In exchange, these partners are expected to use IBM’s cloud infrastructure products or services, demonstrate skills in IBM technology. Like service solution providers they must use and skills in IBM cloud offerings, have at least $300,000 a year in client references based on two cloud client references
  • Application Providers are given access to a named IBM alliance manager, and access to business development workshops. They are expected to use IBM cloud products or services, have skills in these technologies or services, and a minimum of $100,000 a year in revenue plus two cloud client references.
  • Technology Providers get access to networking opportunites, and IBM’s cloud and services assessment tools.  In exchange, these partners are required to demonstrate knowledge of IBM Cloud Reference architecture, have skills related to IBM’s cloud services. Like application providers, these partners must have at least $100,000 in IBM revenue and two client references.

What does IBM want? IBM’s goals with the cloud specialty program is to make it as attractive as possible for prospective partners to chose its platform. It is hoping that by offering financial and technical incentives that it can make inroads with cloud focused companies. For example, it is openings its labs and providing assistance to help partners define their offerings. IBM is also taking the unusual step of allowing partners to white label its products.  On the business development side, IBM is teaming with business partners on calls with prospective customers.  IBM anticipates that the impact on these partners could be significant – potentially generating as much as 30% gross margin growth.

Will the effort work? It is indeed an ambitious program. IBM will have to do a good job in explaining its huge portfolio of offerings to the prospective partners. For example, it has a range of services including CastIron for cloud integration, analytics services, collaboration services (based on LotusLive), middleware services, and Tivoli service management offerings.  In addition, IBM is encouraging partners to leverage its  extensive security services offerings.  It is also trying to encourage partners to leverage its hardware systems. One example of how IBM is trying to be more attractive to cloud-based companies like Software as a Service vendors to to price offerings attractively. Therefore, it is offering a subscription-based model for partners so that they can pay based on usage – the common model for most cloud platform vendors.

IBM is on the right track with this cloud focused partner initiative.  It is a sweeping program that is focused on provides a broad set of benefits for partners. It is pricing its services so that ISVs can rent a service (including IBM’s test and development cloud) by the month — an important issue in this emerging market.  It is also expecting partners to make a major investment in learning IBM’s software, hardware, and services offerings. It is also expecting partners to expand their knowledge of the markets they focus on.

Lotus redux: a transformation in process

February 3, 2011 1 comment

I have attended Lotusphere for many years so it is very interesting to watch the transition. When Lotus Notes was first introduced in the late 1980s, it was a seminal moment in the evolution of collaborative computing. During those first few years, Lotus was able to establish a rich ecosystem of partners and really define the market for collaborative computing — before the general market even had time to think about the necessity for such a platform.  But a lot has changed.  Fast forward to 2011.  Today the ideas of collaboration platforms is now the norm. Individuals, virtual teams, and big corporations depend on collaboration platforms to get business done. For many years it was clear that Microsoft with its office franchise and SharePoint had captured the market. However, with the advent of cloud computing and Google’s push into Google Apps that the market dynamics were changing. Now, add social networking on top of that with services like Twitter, Facebook, and LinkedIn and the world gets a lot more interesting.

So, what does this have to do with Lotus? Actually a lot.  Companies that I have been talking to are frantically looking for ways to combine the spontaneity of social networking platforms with structured collaboration with customers, partners, and prospects. They are looking for new ways to expand their business flexibility and opportunities. This is where Lotus has an interesting opportunity. Lotus has traditionally sold Notes and Domino to the high end of the Mid-market and the enterprise market primarily as a communications platform — i.e. electronic mail.  That is what the typical user sees. But under that interface is complex applications that capture a lot of company intellectual property.  Over time, IBM has added a lot of sophisticated offerings for collaboration such as Quickr and Connections. Now add LotusLive, IBM’s cloud collaboration platform into the mix and things get interesting.  In addition to this new generation platform that brings together the traditional Notes environment with more dynamic collaboration and cloud computing, IBM is enabling analytics on the platform with tools from Cognos.

At the same time, IBM is being realistic this time around. It knows that it cannot displace Microsoft Sharepoint so it is enabling customers to make Sharepoint a component in an IBM driven collaboration environment. Likewise, it is allowing integration with various wireless smartphone environments as well.

But if I were to put a bet on one product that I think will have the greatest potential to bring IBM into the mainstream of social networking — or more specifically social business is LotusLive.  LotusLive in combination with the underlying sophistication of the Notes and Domino platforms, productivity solutions (Symphony), and partnerships and linkages with third party SaaS platforms will drive IBM’s place in the collaboration market.

IBM clearly has challenges getting existing customers comfortable with change and helping them to move their valuable assets to the new world.  But the components are in place. There are also important innovations coming out of the labs that will propel the environment forward.  IBM will have to gather a lot more partners and more adoption from customers who aren’t currently customers. But the opportunity is waiting.

Predictions for 2011: getting ready to compete in real time

December 1, 2010 3 comments

2010 was a transition year for the tech sector. It was the year when cloud suddenly began to look realistic to the large companies that had scorned it. It was the year when social media suddenly became serious business. And it was the year when hardware and software were being united as a platform – something like in the old mainframe days – but different because of high-level interfaces and modularity. There were also important trends starting to emerge like the important of managing information across both the enterprise and among partners and suppliers. Competition for ownership of the enterprise software ecosystem headed up as did the leadership of the emerging cloud computing ecosystem.

So, what do I predict for this coming year? While at the outset it might look like 2011 will be a continuation of what has been happening this year, I think there will be some important changes that will impact the world of enterprise software for the rest of the decade.

First, I think it is going to be a very big year for acquisitions. Now I have said that before and I will say it again. The software market is consolidating around major players that need to fill out their software infrastructure in order to compete. It will come as no surprise if HP begins to purchase software companies if it intends to compete with IBM and Oracle on the software front.  But IBM, Oracle, SAP, and Microsoft will not sit still either.  All these companies will purchase the incremental technology companies they need to compete and expand their share of wallet with their customers.

This will be a transitional year for the up and coming players like Google, Amazon, Netflix, Salesforce.com, and others that haven’t hit the radar yet.  These companies are plotting their own strategies to gain leadership. These companies will continue to push the boundaries in search of dominance.  As they push up market as they grab market share, they will face the familiar problem of being able to support customers who will expect them to act like adults.

Customer support, in fact, will bubble to the top of the issues for emerging as well as established companies in the enterprise space – especially as cloud computing becomes a well-established distribution and delivery platform for computing.  All these companies, whether well established or startups will have to balance the requirements to provide sophisticated customer support with the need to make profit.  This will impact everything from license and maintenance revenue to how companies will charge for consulting and support services.

But what are customers be looking for in 2011? Customers are always looking to reduce their IT expenses – that is a given. However, the major change in 2011 will be the need to innovative based on customer facing initiatives.  Of course, the idea of focusing on customer facing software itself isn’t new there are some subtle changes.  The new initiatives are based on leveraging social networking from a secure perspective to both drive business traffic, anticipate customer needs and issues before they become issues.  Companies will spend money innovating on customer relationships.

Cloud Computing is the other issue in 2011. While it was clearly a major differentiator in 2010, the cloud will take an important leap forward in 2011.  While companies were testing the water this year, next year, companies will be looking at best practices in cloud computing.  2011 will be there year where customers are going to focus on three key issues: data integration across public, private, and data centers, manageability both in terms of workload optimization, security, and overall performance.  The vendors that can demonstrate that they can provide the right level of service across cloud-based services will win significant business. These vendors will increasingly focus on expanding their partner ecosystem as a way to lock in customers to their cloud platform.

Most importantly, 2011 will be the year of analytics.  The technology industry continues to provide data at an accelerated pace never seen before. But what can we do with this data? What does it mean in organizations’ ability to make better business decisions and to prepare for an unpredictable future?  The traditional warehouse simply is too slow to be effective. 2011 will be the year where predictive analytics and information management overall will emerge as among the hottest and most important initiatives.

Now I know that we all like lists, so I will take what I’ve just said and put them into my top ten predictions:

1. Both today’s market leaders and upstarts are going to continue to acquire assets to become more competitive.  Many emerging startups will be scooped up before they see the light of day. At the same time, there will be almost as many startups emerge as we saw in the dot-com era.

2. Hardware will continue to evolve in a new way. The market will move away from hardware as a commodity. The hardware platform in 2010 will be differentiated based on software and packaging. 2010 will be the year of smart hardware packaged with enterprise software, often as appliances.

3. Cloud computing models will put extreme pressure on everything from software license and maintenance pricing to customer support. Integration between different cloud computing models will be front and center. The cloud model is moving out of risk adverse pilots to serious deployments. Best practices will emerge as a major issue for customers that see the cloud as a way to boost innovation and the rate of change.

4. Managing highly distributed services in a compliant and predictable manner will take center stage. Service management and service level agreements across cloud and on-premises environments will become a prerequisite for buyers.

5. Security software will be redefined based on challenges of customer facing initiatives and the need to more aggressively open the corporate environment to support a constantly morphing relationship with customers, partners, and suppliers.

6. The fear of lock in will reach a fever pitch in 2011. SaaS vendors will increasingly add functionality to tighten their grip on customers.  Traditional vendors will purchase more of the components to support the lifecycle needs of customers.  How can everything be integrated from a business process and data integration standpoint and still allow for portability? Today, the answers are not there.

7. The definition of an application is changing. The traditional view that the packaged application is hermetically sealed is going away. More of the new packaged applications will be based on service orientation based on best practices. These applications will be parameter-driven so that they can be changed in real time. And yes, Service Oriented Architectures (SOA) didn’t die after all.

8. Social networking grows up and will be become business social networks. These initiatives will be driven by line of business executives as a way to engage with customers and employees, gain insights into trends, to fix problems before they become widespread. Companies will leverage social networking to enhance agility and new business models.

9. Managing end points will be one of the key technology drivers in 2011. Smart phones, sensors, and tablet computers are refining what computing means. It will drive the requirement for a new approach to role and process based security.

10. Data management and predictive analytics will explode based on both the need to understand traditional information and the need to manage data coming from new sales and communications channels.

The bottom line is that 2011 will be the year where the seeds that have been planted over the last few years are now ready to become the drivers of a new generation of innovation and business change. Put together everything from the flexibility of service orientation, business process management innovation, the wide-spread impact of social and collaborative networks, the new delivery and deployment models of the cloud. Now apply tools to harness these environments like service management, new security platforms, and analytics. From my view, innovative companies are grabbing the threads of technology and focusing on outcomes. 2011 is going to be an important transition year. The corporations that get this right and transform themselves so that they are ready to change on a dime can win – even if they are smaller than their competitors.

Who is using advanced analytics?

November 10, 2010 Leave a comment

I have invited Fern Halper,  Partner at Hurwitz & Associates and an authority on analytics add her knowledge to my blog. The following is her request to fill out a short questionnaire about advanced analytics. We will post a summary of her findings.

Fern Halper

Advanced analytics is currently a hot topic among businesses, but who is actually using it and why? What are the challenges and benefits to those companies that are using advanced analytics? And, what is keeping some companies from exploring this technology?

Hurwitz & Associates would like your help in answering a short (5 min) survey on advanced analytics. We are interested in understanding what your company’s plans are for advanced analytics. If you’re not planning to use advanced analytics, we’d like to know why. If you’re already using advanced analytics we’d like to understand your experience.

If you participate in this survey we would be happy to send you a report of our findings. Simply provide us your email address at the end of the survey! Thanks!

Here is the link to the survey:
Click here to take survey

 

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