IBM Uses Express Products to Drive SMB Sales, Loyalty

by Timothy Prickett Morgan

IBM will this week announce another batch of so-called Express products and bundles that it is using to drive sales into small and midsized businesses and to retain the loyalty of its reseller and independent software vendor customers. With everybody chasing the SMB market, which is growing its IT purchases at a rate that is twice that of the enterprise market, where IBM has hegemony, the Express offerings are IBM's and its partners' best chance of competing as one against many other players.

The idea behind the Express products is simple enough: small and midsized businesses don't need the biggest machines, they do not need the most feature-laden software, and they do not need the most sophisticated services. They also don't want to cope with three different divisions of IBM, plus resellers for these three different divisions, as well as third-party application suppliers. They want to buy a single solution, from a single point of contact, and they want to get IBM support standing behind it.

In IBM's eServer line, an Express server is a preconfigured machine that is ready to go, right out of the box, to support IBM's Express software offerings. Express machines sometime include a discount off list price for a specific configuration, to just do away with the whole bargaining game (this is true with the pSeries Express machines, for instance). IBM's xSeries 225, 235, and 335 servers, its BladeCenter blade servers, its iSeries Model 800 and 810 servers, and its pSeries 615, 630, and 650 servers are all designated as Express-ready. IBM has not yet designated a zSeries machine as Express-ready, but it could do so with the entry zSeries 800 "Raptor" server, or it could designate Linux partitions on any size zSeries mainframe as Express-ready. Similarly, Linux partitions on big pSeries and iSeries boxes could receive this Express-ready designation, and therefore be eligible for the Express solution bundles that IBM is beginning to roll out this week. IBM is also designating certain models of its ThinkPad notebook and ThinkCentre desktop PCs as Express-ready machines.

On the software front, Big Blue started launching the Express products in early summer, starting with trimmed-down and cheaper versions of its WebSphere Application Server (WebSphere Express) and its DB2 relational database (DB2 Express). IBM has since added Lotus Domino Express, which comes in a basic flavor for collaboration (Domino Collaboration Express) and in an industrial-strength version (Domino Utility Server Express) with clustering for mail servers. Both of these are powered by Domino Enterprise Edition R6. IBM says that its research on small and midsized businesses reveals that over 70 percent of these customers are coping with multiplatform environments, just like large enterprises. They are not platform purists, by any stretch of the imagination, and they run a mix of Windows, Linux, and Unix applications. Half of these companies, not surprisingly, are spending big bucks on integrating platforms and their applications.

With this week's Express announcements, IBM is pushing bundled solutions that ride on top of its Express hardware and software setups, working with ISVs to address specific problems that small and midsized businesses (those with fewer than 999 employees is what IBM calls an SMB) deal with on a daily basis. A key component of the whole Express push is Big Blue's ISV Advantage initiative, a $500 million comarketing push that IBM has to help those ISVs that agree to sell IBM's servers, operating systems, database, and middleware products as the foundation of their own solutions.

Joann Duguid, vice president of the SMB unit inside IBM's Systems Group, says that over 2,000 ISVs have been through an Express early-enablement program in the past six months, that over 350 ISV applications have been tweaked to run on Express configurations of IBM's servers and software, and that over 100 ISVs have signed up for the Advantage initiative. Given the amount of comarketing money IBM is shelling out, any reseller or partner that plays in the SMB space will be trying to get in on the Advantage initiative. They will have to in order to hold parity with other resellers and to compete against resellers of solutions Microsoft, Hewlett-Packard, and Sun Microsystems.

Here are the major new Express bundles. They have long names, reflecting the complexity of the problems they are addressing:

• WebSphere Business Integration-Express for Item Synchronization is aimed at midsized businesses, to help them link their supply chain information to a UCCnet GlobalRegistry. UCCnet was set up by the Uniform Code Council, and this nonprofit organization is implementing a standardization and synchronization of product data among manufacturers, distributors, and retailers. Wal-Mart is pushing UCCnet and is requiring that its suppliers become UCCnet-compliant by January 1. This is not easy, particularly when it comes to hooking legacy retail systems into the UCCnet, and that is why IBM is selling this Express solution bundle. The initial package is available on IBM xSeries Windows platforms, with the whole shebang (hardware and software) having a starting price of $7,000. IBM says it will deliver this solution for Linux and OS/400 Express machines by December.
  
  
• DB2 Content Manager-Express is, as its name suggests, a trimmed-down version of IBM's DB2 Content Manager, which stores all kinds of unstructured information and documents in the DB2 database. This program is available on most IBM platforms and costs $9,375 per server or $1,063 per concurrent user. IBM is not offering a particular hardware/software bundle for this product. Just the software.
  
  
• SurfAid-Express is really a service offering, not a hardware or software product, and it is aimed at midsized businesses that want to make sense out of what customers are doing on their Web sites, to try to understand their customers and to drive more sales. IBM Global Services has developed software to track buyer behavior on Web sites, and can help track marketing campaigns and site navigation for customers who do not want to do it themselves. SurfAid Express has a starting price of $100 per month, presumably for a very simple Web site.
  
  
• IBM Life Sciences Express Portfolio Solution for SAS is an Express bundle aimed at life sciences companies and research institutions that want to do a better job of analyzing their big data warehouses. IBM is working with SAS Institute, and it includes a bundle of the SAS application server on top of xSeries-Windows servers and pSeries-AIX servers and installation services from Global Services to integrate it with customer data. A five-user bundle on the xSeries platform has a starting price of $33,370, while a 25-user bundle on the pSeries servers costs $133,680. This offering is available immediately in the United States only.
  
  
• Product Lifecycle Management-Express--Manufacturers have a tough time coordinating their product information used by engineering teams, by assembly plants, and by parts suppliers. This offering is being rolled out with Dassault Systems, a long-time IBM partner in the computer-aided engineering and design markets (and one of the biggest drivers of RS/6000 and pSeries sales). This Express bundle runs on xSeries and pSeries servers and on IntelliStation workstations; it is comprised of IBM's WebSphere Express application server and four different packagings of Dassault's SmarTeam PLM software.

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