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Allowing customers to lease or acquire software that is hosted outside of their premises is gaining popularity as an alternative to having customers install and maintain software on their own systems.
One of the benefits is that customers do not have to invest in additional hardware for their new applications. Another plus is that customers can offload application management tasks to the companies that are hosting the software, often called application service providers (ASPs).
The IBM initiative, called the Application Enablement Programme, features two types of sales model: either IBM and the ISV go into an account together and the ISV sells the software licence and IBM the hosting service, or the ISV can purchase the hosting from IBM and resell it to the customers along with the software licence.
IBM charges ISVs a one-time fee of $100 (£63) per hour for "enabling" one application for the programme, a process that takes between 100 and 300 hours on average. The hosting fees, in turn, vary widely depending on the application, the number of users and other factors.
Once the application has been "enabled" for the programme, it can be further customised for specific customers by the ISV or by IBM's Business Consulting Services unit, which includes PwC Consulting, the IT consultancy IBM recently bought for about $3.5bn.