With IBM in St. Louis; Shai Agassi’s Blog | AMR Research

With IBM in St. Louis; Shai Agassi’s Blog | AMR Research

The St. Louis Chamber of Commerce wasn’t likely pleased to have its hometown crowned “America’s Most Dangerous City” by City Crime Rankings. With that as a backdrop, we expected to hear the “Bad Boys, Bad Boys” theme song from COPS as we de-planed. The closest we came to danger, though, was when a taxi nearly ran a red light as our own taxi was going through the intersection. If the other driver hadn’t jammed on his brakes, he would have hit us broadside and knocked our vehicle into another galaxy.

Instead of danger hovering on every street corner, St. Louis was eerily quiet. We arrived early on Sunday with plans to attend the Cardinals-Cubs baseball game, an event that was postponed due to the unfortunate death of Josh Hancock, a relief pitcher for St. Louis. As we walked through the city on our quest to find somewhere televising the Red Sox-Yankees game, we all commented at how empty the streets and parks were despite blue skies and the 85-degree temperature.

When the work week began, there was a slight increase in traffic, though there weren’t a lot of pedestrians milling about along the route that took us from Fourth Street to Washington Street and the convention center. It was as though the entire city had packed and moved to the suburbs, leaving only the buildings behind.

We were in town to attend PartnerWorld 2007, IBM’s annual conference for business partners. The event drew more than 5,000 attendees who came to hear a packed agenda of speakers ranging from Sam Palmisano, IBM’s chairman, president, and CEO, and other top IBM executives, to race car legend Mario Andretti and Dr. Laura D’Andrea Tyson, senior advisor to the McKinsey Global Institute and former national economic advisor to President Clinton.

After the completion of the morning’s general session, we met with Murray Mitchell to talk about some of the new Global Business Services’ initiatives for small and midsize businesses (SMBs). The first item on our agenda was to discuss the joint IBM-SAP press release from SAPPHIRE announcing IBM would be reselling All-in-One in 12 countries. The reseller relationship began last June in the United States. Since then, it has been extended to Europe and Asia.

SAP: “Significant SMB opportunity”

We talked about SAP’s plan to reach 100,000 customers by the end of the decade. While I have written that I think it’s too ambitious a target if done organically (no acquisitions), Mr. Mitchell said that SAP represented a significant part of the SMB opportunity. The challenge remains the same, though, namely building a volume indirect channel.

IBM has been recruiting resellers to market a bundle of All-in-One as well as IBM hardware, software, and services. It looks like there are three types of arrangements today. These include referrals (a partner receives a fee for passing a deal to IBM), teaming (IBM helps to close the deal), and one where the reseller does everything from identifying the lead to staffing the engagement).

It appears to be going well. While we knew better than to ask about revenue or installations, Mr. Mitchell did say that that GBS’ SMB business was enjoying “double-digit growth.” Most of the applications growth is coming from ERP, though the CRM business is growing thanks to some Siebel engagements and call center projects. IBM is also doing quite a bit of web and portal development engagements, too.

Mr. Mitchell also said that IBM has developed a new IT strategy initiative for smaller businesses. Basically, the company has condensed a typical 8-to-12 week engagement down to 2-to-3 weeks and is making it available for a flat $50K fee. The primary targets are companies with new CIOs.

Resell Oracle, too?

We did ask about Oracle. To date, IBM’s only other ERP reseller agreement is with Lawson Software. IBM has yet to sign a reseller agreement with its database and tools rival, despite the large IBM base that Oracle inherited through its various acquisitions (particularly JD Edwards). It will be more challenging to bring the Oracle relationship anywhere close to the level of the SAP partnership. IBM obviously wants to retain its database, middleware, and hardware customers, while Oracle reps want to replace the DB2 and WebSphere products with its own software. But IBM also has a lot invested in Oracle’s JD Edwards customers and says it is committed to them for the long run.

There may be a huge opportunity for IBM though as the arbiter for the growing number of joint SAP-Oracle customers. As we said last week, when Oracle completes the Hyperion acquisition, it will add 4,000 to 4,500 SAP customers to its base. Many SAP customers still have their Siebel and PeopleSoft applications, too. As SAP and Oracle battle for account control, CIOs may turn to IBM for help sorting it out. IBM will happily supply the software and services needed to link the warring parties via a service-oriented architecture (SOA).

IBM to roll out SIF to other industries

Speaking of SOA, we also met with Jan Jackman to talk about IBM’s Store Integration Framework (SIF). Built on IBM WebSphere, the framework is designed to integrate data and business processes among enterprise applications. It’s aimed at lowering total cost of ownership and streamlining customer interactions. The framework has been adopted by more than 30 retailers for deployment in close to 36,000 stores. Circuit City and Giant Eagle are among those using it.

In addition to a wide range of IBM software products, SIF has attracted 67 validated business partners offering software for order management, point of sale support, loss prevention, RFID tracking, workforce and task management, deli management, and dozens of other uses.

As Ms. Jackman described it, IBM is now looking to roll SIF to other industries—“anything with distribution outlets that are customer facing.” First on the list appears to be branch banking. Retailers often use SIF to link POS systems to kiosks, handheld devices, and the like. Banks could use it to market tailored products and services to customers through automated teller machines. Other potential verticals include automobile dealers, cell phone stores, and healthcare facilities.

If it’s an IBM event, Axentis must be nearby

We last saw Axentis CEO Bob Hoyt at IBM’s fall symposium for the venture community. Sure enough, he was in St. Louis for PartnerWorld. He was there to pick up a Beacon Award for his company’s achievements, one of several IBM awarded to its top business partners.

Axentis provides software to manage governance, risk, and compliance (GRC), and makes it available in on premise and on demand modes. In the past four months, the company has brought 70,000 users live, bringing the total customer base to 740,000 seats. Implementations can be completed in 2 to 6 weeks.

The GRC market is heating up, attracting entrants from the large ERP vendors, like SAP and Oracle, to content providers and content management firms. Look for more GRC coverage in an upcoming First Thing Monday and in our upcoming book, Risk! Navigating an Uncertain World.

Shai surfaces in digital media

Last week at SAPPHIRE we joined the multitudes asking SAPers, “What is Shai going to do next?” Shai Agassi, former president of SAP’s Products and Technology Group, resigned on March 28. According to friends, Mr. Agassi plans to take 100 days off before deciding what to do next. He will not be lacking for opportunities.

In the meantime, he’s started a blog, “The Long Tailpipe,” which can be found on http://shaiagassi.typepad.com. The title is part homage to “The Long Tail” by Chris Anderson. In an early posting, Mr. Agassi refers to “long tail business processes” enabled by NetWeaver and the Business Process Platform. The title also references the future electric car market and the connection of the “virtual tailpipe” to electric power.

Readers hoping to get the “what really happened” inside story will be disappointed. He does offer good insights on enterprise software and alternative energy, though.

Next stop: Austin and Boston

The week starts with a quick flight back from Churchill Downs and the Kentucky Derby, and quickly shifts back to business. First stop is a Wipro conference in Austin, TX. Last stop is a Tata Consultancy Services briefing in Boston. I wonder if they will have Mint Juleps, too.

In the meantime, what do you think? Can IBM and Oracle be partners in the field? Is there a role for IBM in joint SAP-Oracle accounts? What will Shai do next? Please let me know—brichardson@amrresearch.com.




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