IBM middleware to be built into J D Edwards software

Enterprise software maker J D Edwards is to begin integrating IBM's middleware software into its own products, significantly...

Enterprise software maker J D Edwards is to begin integrating IBM's middleware software into its own products, significantly boosting its products' functionality.

J D Edwards' chairman and chief executive Robert Dutkowsky called the deal "the most significant technology partnership in J D Edwards' 25-year history".

J D Edwards, based in Denver, USA, develops software including enterprise resource planning (ERP) and customer relationship management (CRM) applications aimed primarily at midsize businesses. Its products traditionally need to be coupled with software from other vendors, such as databases from IBM, Oracle or Microsoft. Under the deal, J D Edwards will build IBM middleware, including IBM's DB2 database, WebSphere Application Server, and WebSphere Portal, into its own software applications.

The technical integration of the two companies' software will be completed by the end of this year and rolled out to customers over the next several quarters, executives said. The deal will push up the cost of J D Edwards' software, though company executives argued that customers will gain "dramatically more" software capability and save on integration costs.

Customers running IBM technology such as DB2 already comprise the vast majority of J D Edwards' installed base, and those customers will see cost savings over buying the software piecemeal, Dutkowsky said at a press conference in New York. But the integrated IBM-J D Edwards software won't preclude customers from opting instead to use third-party technology, such as a database from Oracle or Microsoft, and those customers could face higher costs as they essentially pay twice for the same functionality, he acknowledged.

IBM's professed commitment to open standards was a "key" factor in J D Edwards' decision to choose Big Blue for this partnership, Dutkowsky said. Financial details of the arrangement were not disclosed.

Given that the vast majority of medium-sized users - a market IBM executives expects to be worth $150bn (£96.5bn) in three years - are now demanding solutions that can be more easily integrated with both new and legacy products, executives from both companies see this deal as better positioning them to cash in on that lavish opportunity.

"About half of that ($150bn) spending will be driven by solutions. More and more midsize customers are simply demanding these solutions integrate with both recently purchased software and their legacy platforms. We think this deals crystallizes that goal," said Marc Lautenbach, vice-president in charge of IBM's small and midsize business unit.

"Typically mid-market customers have just one primary vendor for their enterprise solutions because it simplifies the buying, deployment, and total cost of ownership issues for them. I think this deal [with IBM] just enhances our value proposition with them," said Lenley Hensarling, vice-president of product management for tools and technologies at J D Edwards.

Henaring added that both companies will have an integration centre where they can jointly "work out installation problems and fine-tune software for users so as to complete an individual integrated solution". This, he believes is an important differentiator from what Microsoft has to offer. "This is another way customers can get a quicker path to added value," Hensarling said.

The IT industry is moving toward standardisation of middleware products and protocols, said analyst Denis Pombriant, managing director of research firm Aberdeen Group. Integration issues are becoming a top customer concern, and anything vendors can do to ease those problems will benefit users, he said.

"I think we've reached a level of complexity in the applications market where it's no longer prudent for a vendor to make that kind of [integration] demand on a client, and it's no longer feasible for a customer, because of the cost, to even want to do that," he said.

Thanks to IBM's market reach and strong reputation as a good partner to other vendors, J D Edwards' customers are likely to appreciate this product integration, Pombriant said.

Analyst Joshua Greenbaum agreed, noting that IBM and J D Edwards are "old-time partners who have worked together for years". "Most customers are going to be pretty interested in this functionality and make use of it," said Greenbaum, founder of Enterprise Applications Consulting. "I fully expect a lot of them to look at this in the long run, and even in the short run, as favourable for their costs," he added.

Even those who rely on non-IBM technology are likely to be able to negotiate acceptable terms with J D Edwards to avoid a serious cost hike for features they will not use, he said.

"In this economic climate, customers have a lot of power to dictate what they pay for and what they don't," he said.

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