IBM SMB One Year Later: Expressing SMB Needs

Customers and partners dealing with IBM marvel at the breadth and depth of what it offers and the vastness of the company. It can provide hardware, software, and middleware, plus a full range of services for just about any type of company in as many as 233 territories. But those same customers and partners also marvel out how IBM operates a bunch of disparate and often conflicting companies, nominally couched under a single brand name.

As a customer, it’s hard to know which group to approach for assistance or even which is actually responsible for the overall relationship with your business. If you’re a very big company, the model is clear. As a named account, you know exactly how to engage because you’ve got one contact point. But for everyone else, especially those classed in the Small and Midsize Business (SMB) category (companies between 100 and 1,000 employees), IBM has always been a bit of a labyrinth. Now, IBM’s SMB group is trying to change all that.

The Bottom Line: IBM’s new approach to SMBs is of significant benefit to its customers, greatly simplifying what has sometimes been a tortuous engagement process.

What It Means: IBM SMB acts like a territory, comprising all of the groups that might be in a territory like the UK and Ireland, including Software Group, Global Services, Personal Computing, and Global Finance. Although most of its SMB revenue (60%) is derived from outside the United States, IBM SMB is a virtual group placed within the regions, comprising more than 3,000 representatives specifically focused on SMB, with dotted-line responsibility to the SMB group management.

IBM SMB has also rightsized the marketing of on demand, although in fairness this is true of all of IBM. on demand was overhyped to the point of incredulity, a fact that the company realizes. It now includes on demand as a favored approach to reduce Total Cost of Ownership (TCO), but not as the only way to provide products.

IBM is investing approximately $500M in the go-to-market strategy for SMB. Part of this investment includes the Express products, which are rolling out thick and fast through 2004. Express is really a prepackaged product for a specific need, designed and developed for midsize companies and delivered through the Independent Software Vendor (ISV) and reseller channel. The only problem is that these products are not available everywhere. According to IBM, in some regions, including Europe, the Middle East, and Africa (EMEA), a number of the Express products, including the new PeopleSoft World Express, are not being made available any time soon.

Recommendation: If you fall within IBM’s SMB criteria, check to see if there is an Express product on its way before licensing anything. It may suit you better to wait, as Express prices are dramatically lower.

Conclusion: With IBM SMB’s obvious focus on the Express products, it will need to make its intentions a little clearer to customers and partners around the globe in order to consistently grow. But overall, IBM is taking the SMB market very seriously--as it should--given that it’s the fastest growing sector with a total IT market, worth in excess of $200B (possibly 500,000 companies). The simplification of its messaging, licencing, and pricing options is bound to benefit customers.

AMR Research originally published this article on 25 June 2004.