Ten months ago, we delivered the Cloud
Business Model Readiness Assessment for ISVs, a tool that not only helps
ISVs determine where they are in their cloud journey, but also shows the most
profitable next steps. Co-developed with
TechStrategy Labs, this tools
focuses on the business model transformation required to fully maximize profits
for a cloud solution.
Commonly referred to as the Business Model Self-Assessment,
the tool is an online survey available to all IBM Partnerworld Members. Once logged in with a valid Partnerworld
userid and password, ISVs answer about 20 multiple choice questions related to
the ISV’s SaaS technology, cloud business model, and pricing structures. Once submitted, the results are run through
an analytics engine that produces a customized four-page report for the
ISV. The report includes an assessment
of the ISV’s current SaaS model, as well as recommendations for next steps.
Like any tool, the self-assessment is not a silver bullet
that guarantees success in the cloud.
The report does not contain a magic formula for generating profits from
from nothing. But when used correctly,
the report can provide insights that help a business focus on profitable action
For example, I recently worked with an ISV in the data
warehousing space. Their solution provides
insights to retailers and relies on integrating data from multiple sources,
both inside and outside a business. It’s
easy to recognize why a cloud delivery model is ideal for this type of
application, but prioritizing the technology investments required to get there
is less obvious.
The ISV completed the self-assessment a few days before our
scheduled meeting. We all reviewed the
report in advance of the meeting, and we agreed to use the report as a working
agenda for our meeting.
The discussion was insightful and productive. Based on their input, the report showed they
had not done any virtualization of their solution, but they had completely
enabled mutli-tenancy. We honed in on this part of the report, and quickly discovered that they had
misunderstood our definition of multi-tenancy.
With that question quickly resolved, we were able to turn our attention
to their business model.
Although it might seem
that this ISV should first focus on virtualizing their infrastructure, the financial modeling section of the report revealed that they would achieve significant cost savings through a
more systematic approach to their significant data integration issues. IBM’s Websphere
Cast Iron product set is ideal for their requirements, and they are
currently investigating how to best put this offering to work for their
business. Once they have solved the data integration issues, they will then turn their attention to virtualization and multi-tenancy. One of the many golden nuggets in this report was the realization that although virtualization is important, it's lower on this ISV's priority list than data integration.
Importantly, this partner is free to run the self-assessment
tool as many times as they desire. As
they adopt new cloud technologies, they can play with various cost and pricing
scenarios to see how these investments improve their business.
The SaaS Business Model Self-Assessment tool is available to
all application providers who have Member level status on Partnerworld. Please feel free to use it, and we’ll be
happy to meet with you and talk about the results. And comment here on how the tool is working
As we enter our second year of PureSystems, it’s a good time to step back and reflect on how the PureSystems family is complementary to our SmartCloud Services offerings, particularly for our partners.
To review briefly: PureSystems represents the family of private cloud offerings from IBM. These industry leading solutions, which include PureFlex, PureData, and PureApplication Systems, combine hardware, software, and services under a single order number. These systems vastly simplify the installation, administration, and management of a private cloud.
SmartCloud Services refer to IBM’s family of public cloud offerings. SmartCloud Enterprise is our entry level cloud featuring easy onboarding and simplified options. SmartCloud Enterprise+ is our enterprise-class managed cloud providing a range of SLAs and levels of managed support ideally suited for mission critical applications in large enterprises.
The good news for ISVs is that these two families come together at the application layer, in the form of application patterns. An application pattern is a description of the application, including its architecture, middleware components, tuning parameters, and security settings. ISVs create the patterns once, and then clients deploy the patterns on either PureApplication System or SmartCloud Application Services (SCAS).
Application patterns drastically reduce time to deployment and the overall management of the application. And patterns give developers options for both public and private cloud deployment. ISVs who leverage application patterns do not have to choose between enabling to public or private cloud.
In 2001, IBM published the concept of Autonomics, which was a general description of computing systems that are self-managing. Autonomics sought to address the issue of growing systems complexity by proposing technologies that were self-configuring, self-healing, self-optimizing, and self-protecting. Although IBM delivered many products that provided aspects of autonomic computing, it was all delivered in the traditional data center. Application patterns deliver the promise of autonomics in the cloud.
IBM is publishing examples of how application patterns are changing the game for both ISVs and our joint clients—and we’re eager to hear more success stories. Please let us know how application patterns are working for you across private and public cloud.
Welcome to the Cloud Partner Programs blog!
This is a forum for exploring the cloud-related programs that IBM is building for its partners. Our objective here is to have an ongoing, active dialogue about what IBM is delivering for partners and how we can continually increase our success together.
My name is Amy Anderson and I am the manager of the Emerging Technology team for IBM's ISV & Developer Relations organization. My team and I have been responsible for SaaS programs for
the last several years, and as cloud computing takes off, we are expanding our
scope to include a broader range of partners and cloud-related technologies. In 2011, we’ll be launching a new Partnerworld program for
Cloud. Partnerworld programs are designed for partners to earn points for skills and successful
product deliveries, and in exchange receive benefits from IBM.
There are several key objectives for our program. First, it is critically
important that we have one partner program for cloud computing. The last thing we want to do is to announce a disjointed set of offerings that confuse both our partners and clients and get in the way of our mutual success. A single program with multiple paths makes it much easier for partners to figure out where to start and how to fit in.
Second, cloud computing often changes the nature of how we
interact with our partners. For example,
ISVs and Systems Integrators might both deliver an asset as a cloud service, so
running separate programs for ISVs and RSIs would not be the most effective way
to on-board solutions to our cloud. The cloud program will focus on what partners want to do with cloud computing, and delivers benefits that meet those needs.
And finally, creating a single program for cloud computing
lets us fully demonstrate IBM’s value
proposition to our partners as well as our clients. As our partners have told us, the value of
working with IBM on cloud computing is both
the breadth and depth that IBM can bring to
our clients. Partners in particular
perceive that IBM has a much more complete
ecosystem for cloud than our competitors, and this is a key reason for doing
business with IBM. It is through a comprehensive program that IBM can deliver
After some detailed analysis,
we have established six paths for cloud. Each path is defined by what partners need from IBM
for cloud, not by technologies or how we traditionally classify partners. For each of these paths, we’ll have a variety
of partners who want to participate; some partners will participate in multiple
Providers. These are partners who
want to deliver their application or asset as a cloud service. Most of our existing SaaS partners will
participate in this path. Although
our main objective is to get the applications onto IBM’s
we will continue to support partners who want to use IBM
middleware on other vendor’s clouds.
Providers. These are partners who
have tools or services that improve the experience of the IBM
cloud. There is a wide variety of
tools that fall into this category, anything from virus scanning to
application enablement tools.
Technology providers have a different set of needs from application
providers, and our go to market strategies with these two partner types
will be different.
Providers. These are partners who want to build and manage a public cloud
infrastructure. This could be
anything from a PaaS provider to a partner who wants to build a public
cloud using IBM componentry—anything
from our middleware to Power systems to cloud-specific storage.
Builders. These are partners who
want to build private clouds on behalf of their clients. Typically, these are services-driven
organizations who build highly customized environments for large
Resellers. These are partners who
want to resell IBM cloud offerings. Today, the offerings available for
resellers are focused on LotusLive and TivoliLive, but the range of
offerings will no doubt expand in 2011.
Aggregators. This path has a high potential for opening entirely new markets to IBM and its partners. Aggregators are organizations who want
to bundle cloud services for their constituents, but they are not IT
organizations and are not interested in building or managing clouds. They want to provide cloud services, but
will need other organizations to provide support.
In subsequent blog posts, we'll be going through the six partner paths in more detail. Please comment and contribute as we go. Cloud computing is a dynamic and exciting area to be involved with, so I'm sure we can have a lively discussion!
eWeek is reporting today
that a "vast majority" of small business owners are unaware of cloud computing. In a survey conducted by Newtek Business Services, 71 percent of the 1800 respondents said they had never heard of cloud computing. Of those had heard of it, only 26 percent could describe what it was. There were two other questions in the survey, related to offsite backup and data security. Most respondents were not using any form of offsite backup, but they believed that their onsite servers were secure.
The implied conclusion is that someone needs to get busy educating those small business owners. After all, we can't have them left behind as larger businesses move to the cloud.
But if the survey had asked just one more question, we might be able to draw a different conclusion. It would be insightful to know how many of these same business owners are using any of the following:
- an online meeting tool such as gotomeeting, Webex, or LotusLive
- an online CRM tool such as Salesforce or SugarCRM
- an accounting package that provides online interactivity with a bank
I suspect that the combined use of these types of tools would be much higher than 26 percent, and then we could conclude that small business owners are already in in the cloud.
If the promise of cloud computing is true, small business owners shouldn't have to know what it is. They shouldn't have to be able to describe it. Instead, they would be able to to say things like, "I reduced the fixed costs of running my business and optimized on the variable costs that fluctuate with my customer base."
Small Business Owners are not technologists. But we are. And although we love to articulate the finer nuances of cloud computing, (don't get me started on that silly TV ad where editing family photos is "in the cloud") it should not be our mission to indoctrinate this valuable market segment about what constitutes a cloud and what doesn't. Our mission here is to provide the solutions that make their businesses more efficient, profitable, and successful.
Happy New Year!
IBM'ers in the US got Monday, January 3 as our New Year's Holiday, so if you were working today, you probably enjoyed an unusually light email load from your IBM colleagues and friends. Not to worry, the onslaught of communications will resume on Tuesday, January 4. We are all rested, refreshed, and happy to be back at work!
Pundits and analysts across the IT spectrum--those that follow technologies, those that follow sales trends, and those that follow the followers--are in general agreement that cloud computing implementations will increase in 2011. The volume of activity varies depending on who you ask, but everyone agrees that overall levels of activity will increase this year. And in particular, partners of all sizes and from all regions are expressing an increased interest in Private Cloud.
Although a private cloud can take on many flavors, the general idea is that resources in a data center are re-deployed to be more dynamic and flexible. In addition to the virtualization of hardware resources, which many organizations already do, a private cloud allows for a highly dynamic re-allocation of resources across applications.
For example, a large medical organization wanted to run a test of their new backup and recovery environment. Previously, they would have had to acquire a completely identical system to the application they were testing, for what was essentially a one-time test. With a private cloud, they can more quickly deploy an environment that mirrors their production system, run the backup test, and then redeploy the resources for a completely different purpose, probably for a different organization or team. Because a private cloud provides a higher level of systems management--which is available from IBM's Tivoli brand--redeployment of resources is faster than a traditional data center, even one with highly virtualized systems.
For many, building a private cloud seems like a good first step in cloud computing implementations. Large organizations especially continue to express security unknowns as one of their top inhibitors to a public cloud environment, so building a private cloud seems to assuage the security concerns while allowing for the flexibility that cloud offers.
IBM, along with its partners, is ready and able to assist with these private cloud implementations. We're partnering with a variety of partners who can assist you with all aspects of building private clouds, from the concept and design stage to the implementation and ongoing management. And in the first quarter, you'll see us ramp up our activities around private cloud.
Again, welcome to 2011. We look forward to a successful year together.
This afternoon I was talking with Sumitro Sarkar
from TechStrategy Labs
, who provides pricing and cost analysis for cloud implementations. Wall Street media were abuzz today about a "massive sell off" of cloud-computing related stocks, spurred by earnings warnings by two fairly visible cloud-related companies, Equinix and Autonomy. Articles on Barrons, Forbes, and other sites expressed alarm that Equinix adjusted their earnings estimate downward based in part on "greater than expected discounting..." Barrons listed several other data center vendors who posted losses on the day.
Yet IBM closed the day up 0.18. Although Sumitro and I both agreed that there is no measureable correlation right now between the industry's perception of cloud computing and IBM's stock price, there is--at least possibly--some insights to be gleaned from these data points.
The cloud computing market is much bigger than data center vendors. Indeed, UK--based Autonomy, also cited in Barrons as issuing a warning that spurred the sell-off, is a software infrastructure provider. And Autonomy's business is broader than the cloud, so a warnings statement from them is not exactly a bellweather of the state of cloud computing. There are many aspects to cloud computing--from the tools that enable applications on the cloud to virtualization technologies to the applications end users access--so it's a bit dangerous to draw dire conclusions from the stock fluctuations of a few companies in the data center and hosting business.
But there is an even finer point to observe in the Equinix statement. There are discounting pressures on the hosting providers. This is a sign of a market moving out of the nascent stage, and that has a distinct pattern in the computing industry: In order to continue winning business, cloud vendors will need to differentiate themselves and provide demonstrated value. This will be true for vendors across the entire cloud ecosystem. A "me too" approach at any layer of the cloud will not suffice, regardless of the discounts provided.
There is plenty of room at the table for vendors of all sizes and value propositions. There is plenty of opportunity for growth for all the current participants in cloud. But any vendor who wants a long future needs to be absolutely clear who they serve and how they deliver value.
It’s been two weeks since IBM announced its new
program for Managed Service Providers (MSPs). We’ve been working with these types of
businesses for years, but with the launch of this program, IBM is acknowledging
how MSPs are at the forefront of using cloud computing to reinvent business.
Throughout the industry, the term “MSP” is broad and
vague. Its roots trace back to the
Application Service Providers of the late nineties. Back then, we had some notion that increased
bandwidth could enable small businesses to get out of running their own data
centers and simply pay an offsite service to manage their applications. Over time, this notion blossomed into a
business model where service providers add value through their expertise in
application usage, systems management, and business process.
MSPs, then, do much more than keep the data center running:
they provide expertise that businesses of all sizes—not just small
businesses—simply cannot maintain on their own.
For example, Doug Mow, Senior Vice President of Sales and
Marketing at Velocity Technology Solutions, explains that what clients value
about Velocity’s managed service is their deep expertise on Infor
applications. There are several
functions that most businesses only perform once or twice a year, such as
processing bonuses or adjusting payroll deductions. For on premise environments, teams often have
to relearn how to perform these functions every time they do them. But an MSP like Velocity performs these
functions regularly on behalf of many clients, thus increasing efficiencies for
MSPs bring expertise and economies of scale to their
customers. In turn, IBM brings affordable,
robust technology, worldwide marketing reach, and business transformation
support to the MSPs. For more
information on how we’re working with MSPs to reinvent business, visit our MSP
Virtual Briefing Center.
In a recent CNBC interview, Marc
Benioff, CEO of Salesforce.com, said that the future of IT will
belong to those firms who are investing in social, mobile, and cloud.
Then he went on to point out how well his company has invested in
these areas and how poorly his rivals are investing.
In an October 22, 2011 New York Times
editorial, columnist Thomas Freidman wrote about a
recent visit to Silicon Valley and reported on an IT revolution
“driven by the convergence of social media...with the proliferation
of cheap wireless connectivity and Web-enabled smartphones and 'the
cloud'...” Again: social, mobile, and cloud.
From IBM's perspective, the
social-mobile-cloud sound bite is 75% correct. Cloud computing,
mobile technologies, and social business are inextricably
intertwined, and IBM also believes that those companies investing in
these technologies will be tomorrow's IT leaders. But IBM has a more
complete view of the future, and it's based on our last 100 years of
From the 2011 IBM CIO
Study and the CMO
Study, as well as several third party studies, analytics is one
of the top investment areas for executives who control IT spending.
The social-mobile-cloud sound bite completely misses that point.
True, the cloud makes the explosive growth of analytics possible, and
the explosive use of mobile and social gives everyone more to
analyze, but it is an oversight to leave analytics out of a vision
for what is hot now and what is driving the future.
In addition, IBM describes the future
through what we call the 2015 roadmap, and it has four elements:
growth markets, analytics, cloud computing, and Smarter Planet.
Taken together, these initiatives encompass social business, mobility
enablement, and cloud computing, and put them in the context of a
global market. The roadmap is also more complete than the sound bite
in that it includes a timeline and revenue targets. It's one thing
to say that the future depends on investment in a few technologies,
and it's another thing to publicly commit to a deadline for showing
actual results from those investments.
The roadmap is not merely a technology
statement. IBM's success over the last century is due in no small
part to being able to nurture compelling technologies and create
markets for them. We look forward to working with our partners
turning these exciting new opportunities into success stories for our
Modified on by AmyHAnderson
And finally, the system needs to be viewed as a dynamic, interconnected network of constituents. Although it doesn’t need to be difficult to decipher, an ecosystem is necessarily more complex than a simple partnership.
Partnerships are one to one relationships. They can be as structured as a strategic alliance, where the two parties make formal revenue commitments and drive sales jointly, or as casual as two sales reps meeting for coffee occasionally. But’s driven by two organizations with common objectives and a belief that mutual revenue will result from interacting with each other.
Effective partnerships happen when the two companies are highly aligned with each other. Corporate cultures, organizational styles, and compensation programs are complementary, making it easy to work with each other. Distributors and resellers have built their businesses around aligning to the vendors with whom they partner, epitomizing the approach to partnering.
Partner programs are one to many relationships. Vendors build programs to provide benefits to groups of partners. Programs help categorize partners by how they specialize and by their level of commitment to the vendor. Partners derive value through financial benefit, influence with the vendor, and non-monetary support such as technical enablement.
When a vendor develops a set of partner programs, it’s easy to mistake that collection of programs for an ecosystem. But unless the constituents in the programs have independent and systematic access to each other, there is no ecosystem.
A true ecosystem is a set of many to many relationships between partners in the “feeding system” and the influencers in the “energy flows.” As described in Part 2, the flow of money and the exchange of ideas are critical to a sustaining a vibrant ecosystem.
And as the ecosystem matures, there is less need for a single orchestrator to direct the activities of each constituent. Two parties may work together on a project or deal that has benefits that reverberates through the ecosystem. This is fundamentally what differentiates an ecosystem from a set of partner programs.
Open source computing models provide the basis for a mature ecosystem. Open systems have long been heralded as the antidote to vendor lock-in, but in reality, the true value of open computing is the fluidity of ideas, and increasingly the opportunity for new economic models.
For example, when a vendor makes a service available as an API, there are several ways to monetize that service, either through direct sales, revenue sharing, or advertising. Highly mature online communities, fueled by social business, create the platform for this exchange that benefits the entire ecosystem.
Summarizing all three parts
In summary, any organization looking to build an ecosystem needs to start with a three-pronged plan:
Define the whole and the sum of the parts
Who are the constituents?
How do they interact?
People and assets required from each constituent
Who is creating the assets?
What are the assets?
Who is doing the selling?
Money and content
How does the money flow through the ecosystem?
What kind of content needs to flow through the ecosystem and what channels will the content require?
Answering these questions is a lot harder than it sounds. But as the industry moves into this next paradigm of computing, getting these answers right will be critical to every vendor’s success.
This week I'm in Bangalore attending several partner meetings. One of these was with an application provider who has a very strong business in the telco industry. Their primary delivery model is on premise, but the private cloud portion of their business is at 15% of revenue this year and expected to grow to 40% over the next three years. In the course of talking about how the business will transition to the cloud, the CTO shared an interesting observation: cloud computing creates a desire for a menu of applications.
To explain further, in a traditional IT environment, a customer establishes a requirement for a certain capability. They form a team to define objectives and requirements, establish a budget, issue an RFP, and select a provider for the application. The key to this process is the budget. With traditional computing, there are only enough resources for a fixed solution, both from the perspective of capital expenditures and the people required for deployment. But when a businesses decides to acquire their application capabilities as a service, they are moving to an operational expense model, which frees them from having to associate new functionality with the cost of operations. This, in turns, gives the business the flexibility to consider complementary functions that can be rolled into the new service.
So, the CTO tells us, when a prospect engages with his company to evaluate a specific application, if the delivery model is private cloud, the customer invariably asks about additional capabilities and applications. This is not only an opportunity for the partner in question, it's an opportunity for the larger ecosystem.
This CTO has succinctly expressed something that we hear in a variety of ways from all of our partners: cloud computing implicitly increases demand for application capabilities. An obvious case in point is the plethora of applications on Facebook. When users don't have to install and maintain the applications themselves, they are more willing to install not just one or two, but numerous complementary functions. Of course, anyone who runs a data center would probably say Facebook makes it too easy, but that aspect can be controlled through policy and technology.
More importantly, the increased appetite for a menu of capabilities isn't met by merely providing a nifty catalog of applications. Application providers will meet their customer's needs by participating in a well-structured ecosystem of partners. Catalogs are merely an interface, the real benefit of complementary applications comes from an understanding of how applications fit together, as well as where and when a given partnership makes the most sense. And that requires a partner who can coordinate these relationships without unnecessary interference. Fostering an ecosystem in this way is exactly what IBM is doing with the Cloud Specialty.
With the partners in our program, we are helping them grow marketshare by connecting them to each other. The process is fairly manual for now, but look for tools coming later this year that will help automate some aspects of the program. But complete automation is not the goal, we are not trying to build an online matchmaking service for partners. We intend to provide the worldwide, cross industry market perspective that helps partners make sense of the opportunities they see.
Every partner that we're meeting with this week is on the cloud journey and has exciting plans for how cloud is expanding their marketshare and growing revenue. And in every case, IBM has a role to play in bringing our ecosystem to bear in building our mutual success. We look forward to growing our business with our partners.