Embrace our on-demand vision, says IBM CEO

IBM chairman and chief executive officer Sam Palmisano exhorted business partners to adopt IBM's on-demand vision of...

IBM chairman and chief executive officer Sam Palmisano exhorted business partners to adopt IBM's on-demand vision of standards-based IT flexibility.

"You have to commit to our point of view. You have to commit to open standards. If you do that we will invest with you, to help you become more successful," Palmisano said in the opening address of IBM's PartnerWorld conference in Las Vegas yesterday.

Palmisano reiterated the on-demand vision that has formed the foundation of IBM's strategy for the past two years, and on emphasising the critical role business partners play in IBM's market approach.

Partners accounted for $29bn in IBM revenue last year, around one-third of the company's total. In some segments, including servers and sales to small and midsize businesses, he pegged resellers' contributions at more than half IBM's total.

Palmisano addmitted that IBM's on-demand strategy was greeted with widespread confusion and misunderstanding  because "on-demand computing" is a combination of approaches to address what IBM sees as a fundamental change in how the IT industry operates.

"The value proposition of the past decade has failed," Palmisano said, criticising the best-of-breed approach to building an IT infrastructure. "The client is forcing us to focus on solutions. They do not want to be the assemblers of piece parts. … That was a different era, and the world has changed."

Palmisano said the "invent and project, proclaim and thrust" model IT suppliers had of creating technologies and throwing them into the market to see what would stick, was also long gone. That approach led to some successes, but also to "incredible failures", such as the paperless office and the dotcom bubble, he added.

Palmisano cited open standards as the critical element in the fresh approach needed by IT suppliers. 

"Every industry that's matured has adopted standards. The IT industry is a young industry maturing into adopting standards," he said. "You have to have standards. You have to. It's the only way to solve the very great, very important, complex problems."

However, Palmisano's speech drew mixed reaction from some IBM partners.

"It's still vague to me what their differentiation is from anybody's else," said Mark Godschalk, vice president of business development at security software firm SPI Dynamics. "But that's not that they are less vague than HP or anyone else right now." 

Godschalk, one of some 5,500 people at this week's PartnerWorld, said the company's message "needs more substance to it" along with tangible examples of business value. 

But Lowell Feuer, chief executive officer of KlikVU, a media-over-IP developer in New York and a new IBM partner, said Palmisano's message of adherence to open standards, integration and security is welcome. "He said exactly what we have been thinking about for a year," he added. 

Meanwhile, Dallas Newton, manager of development services for Australian firm Independent Systems Integrators, said Palmisano is working to "to get people behind their strategy" while still working at creating it. 

"I don't think it's there yet, but I guess this is all part of promoting it to keep the momentum going." 

"There are still a lot things to articulate around on-demand to make it more tangible," said Cap Gemini Ernst & Young chief technology officer Garry Gomersall, although he is confident in IBM's direction and believes that Palmisano did a good job at spelling out IBM's direction. 

Palmisano "made sure that everyone understands that it was around many different things," Gomersall added.

After Palmisano's keynote, IBM's general manager of business partners, Mike Borman, took the stage to speak to about the company's plans for the coming year for improving its partner relations initiatives.

IBM will streamline its promotions process and reduce the bureaucracy involved in working with the company, Borman said. IBM also plans to use Siebel Systems' CRM OnDemand technology it sells to help in its interactions with partners, and of IBM's intention to implement an automated system for sharing information on leads.

Targeting small and midsize businesses will remain one of IBM's priorities in the coming year, Borman added, citing the dramatic results the company achieved last year.

With $350m in additional spending on small and midsized businesses initiatives, IBM reaped $4.5bn in additional partner-driven revenue. By the end of next month, IBM will have 50 offerings in its small and midsized businesses-aimed Express portfolio of bundled and customised products, according to Borman.

Linux is another area where IBM forecasts growth. Partners drove $500m in Linux-related revenue last year, and IBM expects that number to hit $1bn this year.

  Stacy Cowley  writes for IDG News Service;  Patrick Thibodeau writes for Computerworld

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