IBM extends application hosting to SAP, Siebel
Summary
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Until this point, IBM's hosting services for enterprise applications have been primarily custom one-offs, but the new offerings are intended to be more replicable. IBM previously offered "packaged" hosting solutions only in the form of e-procurement solutions based on Ariba and WebSphere Commerce Suite.
IBM's new application hosting solutions are complemented by a full range of infrastructure-oriented solutions from its e-business hosting unit and leverage both functional and vertical industry capabilities from the Business Innovation Services and Applications Management Services units of IBM Global Services. The company also seeks to leverage IBM software capabilities, including applications integration technology from CrossWorlds. IBM seeks to achieve synergies with its XSP Prime program. In addition, it is emphasizing a shared-infrastructure approach that may present a hurdle in terms of customer acceptance, but is also a principal source of cost savings made possible by the application hosting program.
The Hurwitz take: Prior to its application hosting services announcement, IBM had already emerged as a major contender for hosted application services, but its role in the market was little known and underappreciated, except by its customers and primary ASP competitors.
Although IBM has taken pains to differentiate the new offerings from first-generation ASP services, strong similarities remain. The new offerings are predicated at least in part on the basis of lower TCO just as early ASP offerings were, and they are also conventional in their emphasis on fixed-length contract terms.
Unleashing customer demand will also be an issue, as many ASPs have learned in the past, for which IBM's stability and reputation will help. However, IBM is also seeking to gain from lessons learned in targeting enterprise--as opposed to purely midmarket accounts--and in offering a full roster of complementary services, including implementation to create a "one-stop shop."
More important, the new application hosting announcement is the latest in a series of introductions, including Services Anywhere and Linux virtual services, in which IBM is beginning to flesh out its expansive e-business-on-demand vision with tangible offerings that, although not purely utility-based, at least represent steps in the right direction.
Bill Martorelli is vice president for enterprise services strategies at Hurwitz Group. This article was first published by Hurwitz on July 19, 2002.
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