IBM offers stamp of approval with xSP Prime

What’s in a name? A lot, according to Inc.’s CEO, Morris Panner., a provider of professional services automation software, went from being a small company in Boston that wasn’t exactly sure how to make the move to a larger market.

After developing its application, the company was faced with the problem of how to bring its product to more customers and then assure these customers that would make a good partner.

“IBM offered the real partnership we were looking for,” Panner said. “It’s no secret in these turbulent times that companies have a double burden. We have to prove out our power as a product, but we also have to prove that we’re a long-term partner. With IBM we could go to the world with a long-term commitment. We were able to give people a branding by association, because people associate IBM with stability.”

IBM Canada also offers the program, recently re-launched as xSP Prime. Marilyn Beaton, IBM Canada Ltd.’s business development executive for application service providers and incubators at the NetGeneration Business Unit in Toronto, explained that the name change has to do with the program’s expansion of offerings to its clients.

“We made some changes to the program to broaden it out,” Beaton said. “In general, the service provider market is changing. Our original focus was at the application level. Now as the market is maturing, we’re finding different flavours of service providers: storage providers…infrastructure providers…managed service providers. All the offerings we had available in ASP Prime are applicable to other types of service providers. We had the program available, so why exclude anybody?”

xSP Prime partnerships require an investment by both IBM and the program candidate. In exchange for making a commitment to run their infrastructure on IBM equipment, candidates are given services valued at between $100,000 and $250,000.

“The program helps our customers be successful, and helps us sell more equipment and services,” Beaton said. “It’s very much a partnership orientation. We’re not a company interested in dumping gear. We’re much more focused on helping our customers become successful. The xSP Prime program is not just about what equipment you should have, but are you prepared to run a successful business. We work with lots of ASPs and know the ditches, so we try to keep our customers away from them.”

This approach impressed Panner and his colleagues, whom he described as “entrepreneurs at heart.

“We were impressed with the way they helped us define objectives,” Panner said. “In some ways, they turbo-charged our business, and this makes us an even better solution. IBM makes us stable by extension.”

Lew Hollerbach, an analyst with Aberdeen in Boston, questions the validity of this perceived stability and the value of programs such as xSP Prime.

“Is it valuable for IBM? Yes, for a number of reasons,” Hollerbach said. “The most cynical answer is that it’s a way for IBM to sell more hardware. Less cynically, it gets IBM’s thought leadership out there, they’re a trusted partner, a source you can go to, a one-stop shopping spot where they’ll give you all the answers and support you as much as they can.

“From a service provider’s perspective, is [the program] valuable? Yes and maybe,” he continued. “I will say yes because again it provides the service provider with a place to go to get questions answered. The maybe part of my answer has to do with the logo or IBM trademark thing that you can plaster all over your collateral and Web site that says you’re an xSP Prime member. Does the customer recognize that as valuable? That’s the real key. Ultimately the customer has to care about this.”

According to Hollerbach, this recognition from the customer will come if and when the customer realizes that the xSP seal of approval is a designation given after a rigorous certification process, and is not handed out to everybody.

This is not something that Panner is concerned about.

“This is not like a frequent flier card, where you simply buy the mark. You have to prove that you can be part of the [xSP Prime] team,” Panner said.

Once a candidate comes into the xSP Prime program, IBM moves with them through five general steps: Educate, Assess, Enable, Host and Launch.

“We first take a look at the [company’s] business model,” Beaton said. “We find out when they expect to build their ASP, how they expect to do it and the customers they’re trying to attract. From the business model and business plan, comes input on the technical side.

“We do scalability testing, and capacity testing, and a lot with building the environment,” Beaton continued. “What happens if [a company] gets 10 customers? 20 customers? 100? 1000? Is the ASP architected correctly? Can it sustain customer growth? Is the chosen infrastructure going to be able to sustain growth?”

Hollerbach expects that more of these kinds of programs will pop up over the next few years, and will become more sought after on the customer side.

“We’re in the early stages in these programs, but they need a critical mass. It’s like ‘Intel Inside.’ Once it’s been shoved into your brain enough times, that’s what you begin to look for. Only then will they become really valuable,” he said.

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