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Weekly Review: IBM Practices Software Preaching
Nov. 19th, 2002: In this week's commentary on ASP industry news: IBM is not only teaching its partners how to sell software as a service, it has itself already taken its own lessons to heart.
Last week's news that IBM has launched an "application enablement program" to help independent software vendors (ISVs) create "on-demand" versions of their software sounded eerily familiar to old hands in the ASP business (see Big Blue Moves to On-Demand 'Fast-Track').
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By August 2001, when the scheme was relaunched as xSP Prime, more than 300 software vendors had completed the program (see IBM Adds 'X' Factor). Successful alumni include providers as diverse as leading professional services ASP OpenAir, custom relationship management (CRM) vendor Pivotal Software and healthcare industry behemoth Siemens Medical Solutions.
From its earliest days, the scheme was centered on encouraging ISVs to adopt a Web-native approach the architectural precursor of what we now know as Web services and it gradually expanded to embrace Linux and Windows server platforms as well as IBM's own proprietary systems. As well as this technical dimension, it also helped participants prepare appropriate business models for delivering online software services.
Big Blue Taps Infrastructure ISVs
This selection of ISVs sends a clear message that the on-demand software delivery model is not only or even primarily at the moment for applications, so much as for infrastructure functions and tools. Oddly enough, I recall mentioning something similar in the August 1999 report, Anatomy of an ASP:
IBM Mixes Pay by the Drink Pricing Plan
Previously, the notion of by-the-drink software was firmly associated with ASPs and their per-user, per-month pricing. But there is no reason why it shouldn't also apply to traditionally installed software, especially in the case of server software that by definition is going to be connected to the Internet, and therefore could potentially be set up to report usage statistics back to IBM if the company wanted to make sure customers were playing fair.
IBM seems to have realized that the only objective that really matters is getting more businesses using its software, and that it loses more by retaining a price barrier to adoption than it is likely to gain. Its calculations of the profit opportunity are probably also influenced by projected take-up of the hosted security service being offered by Verisign as an optional extra.
IBM Heeds Its Own Advice
Phil Wainewright founded ASPnews.com in 1998 and is the publisher of Loosely Coupled. He can be contacted at
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