IBM Canada Ltd. announced in early September its intent to invest $35 million over the next five years in a plan to help its business partners and in turn itself with offering Big Blue’s services to the small and mid-sized business (SMB) market.
The SMB marketplace is spending a lot of money on services today, but they are getting them form local providers, explained Denis Vance, group vice-president of products and services research with IDC Canada Ltd. in Toronto.
Speaking with SMB focus groups, Vance said he discovered that the small to medium market tended to stay away from large vendors for their service requirements for two reasons. Reason number one being that SMBs didn’t believe the big vendors were interested in them and secondly they didn’t think they could afford the fees that would be attached to the services from a larger provider.
On top of these concerns there was one other, according to Vance, there was also the question about the measure of control. “As one of the CIOs that participated in one of our focus groups stated…to Acme Systems down the street I am 20 per cent of their business. To Microsoft they don’t know or care who I am.”
IBM says it recognizes that there is a deeper trust between local providers and its customers, so with its hefty investment it is focused on giving its business partners access to the resources of a larger provider.
These business partners, which include independent software vendors (ISVs) and regional systems integrators (RSIs), will gain IBMs “breadth and depth of industry expertise” but will still be the smaller, local company’s that the SMBs trust, explained John Ostrander, vice-president of SMB services and channels at IBM Canada in Markham, Ont.
“At the end of the day it’s very clear in our research into the marketplace that customers are very interested with local providers, people that they know and trust,” Ostrander noted. “From IBMs perspective, our ability to enhance their services and their relationships with their clients by attaching IBM solutions is exactly the right way to get at the marketplace.”
IBM has billions of reasons it would want to get at that marketplace, according to IDC Canada research. The total services opportunity in the mid-market in September 2003 was $5.35 billion, said IDC’s Vance.
How does that compare to large enterprises? IDC took the same set of numbers at the same time of year and found that the services spend in the larger market was at roughly $9.4 billion, Vance added.
How to become attractive to SMBs has been a dilemma for all the major players, Vance noted. With the major challenge being, how do they get into the market in a cost-effective manner?
IBM is using collaboration as a way to reach out to its partners and in turn its customers to make that SMB connection. It’s intent, according to Ostrander, is to come together with its partners as well as solutions providers in the marketplace and focus on the IT challenges of SMBs.
If you think about things that IBM has done, the acquisition of PriceWaterhouseCoopers, for example, IBM would like to bring that industry expertise to bear through its partners that are influencing its customers to make decisions, Ostrander said.
“Where a customer may in fact go to their ISV for advice around security, we’d like the ISV to potentially recommend IBM as a solution provider.”