Over the last several weeks, IBM and Hewlett-Packard have taken significant steps to target small and midsize businesses (SMBs) with solutions that are tailored to their needs. While the two vendors' announcements demonstrated their growing investments in this market, they also indicated that the competition between the IT behemoths is heating up.
The latest round of announcements began on October 26 when IBM hosted a party to celebrate the two-year anniversary of its Express line of products. At the event, the company launched a new advertising campaign, known as Express On Demand Business, which targets SMB firms with the message that they need to become On Demand enterprises. As part of the campaign, IBM released a flock of print and television ads and officially opened a slick multimedia Web site for the Express portfolio.
While there was plenty of style to Big Blue's gala, there was substance as well. During the event, the company unveiled three new Express solutions. IBM Integrated Platform Express for Web Application Serving is an offering for hosting dynamic Web sites that includes an eServer pSeries system and WebSphere Application Server Express. IBM Workplace Services Express delivers collaboration software in a portal-based environment for Intel server users. Finally, IBM Process Integration Solution Express (PISE) provides a solution for integrating applications and internal business processes on eServer i5 and xSeries servers.
Given its availability on the eServer i5, many iSeries users will take great interest in the new PISE offering. In a real sense, PISE represents a new, more sophisticated crop of Express solutions that integrates hardware, software, services, and even financing into a complete package. The solution includes the iSeries customer's choice of an eServer i5 Model 520 or 570; Intel users get the xSeries Model 226. The server arrives at your door with a copy of WebSphere Business Integration Server Express. The offering contains middleware for business process modeling and redesign, including WebSphere MQ Express, that enables integration between disparate applications.
In addition, PISE comes packaged with an IBM Business Partner or IBM Global Services team that installs the software and provides an initial round of application integration assistance. IBM estimates that the typical deployment will consume 320 to 500 hours of services at an average cost of about $35,000. It also estimates an average hardware cost of $12,000 and an average software cost of $30,000. However, customers can finance the entire package through IBM Global Finance and make monthly payments as low as $2,259.
While IBM used its October 26 event to focus on its own products, it has not forgotten the solutions of its Business Partners. The company is continuing an ambitious campaign to recruit software vendors and systems integrators who can package and market IBM technologies with their own SMB solutions. Two days after the event, for instance, IBM and Integrated Distribution Solutions announced an expanded alliance under which the vendors will develop Linux-based versions of its applications for the food and consumer goods distribution industries. The resulting software will run across Big Blue's iSeries, pSeries, and xSeries servers. IBM is also working behind the scenes to broker distribution agreements between software vendors and regional integrator firms that deploy solutions in SMB firms.
Partnering the HP Way
One day after IBM's Express gala, Hewlett-Packard threw its hat into the ring with a new offering for SMB firms. The systems vendor joined with SAP America to announce a managed service that provides HP-hosted instances of the mySAP All-in-One suite to SMB firms. The service also includes third-party software for companies in the oil and gas, consumer products, high-technology device, and technical service provider industries. Hewlett-Packard will host the new services at a monthly cost that starts at $325 per user.
The new managed services are part of a wider set of initiatives that HP launched about a year ago to target the SMB market. The vendor's chief initiative is Smart Office, a campaign under which HP goes to market with selected software vendors and local solution providers. Hewlett-Packard is using Smart Office to partner not only with SAP, but also with Microsoft and Intuit. Each of these vendors works with HP to develop packaged offerings that are delivered through their networks of regional integrators and resellers.
To a degree, IBM's Express and HP's Smart Office put the two vendors at competitive odds with each other. After all, both programs focus on building ecosystems of SMB partners who commit to IBM or HP products. However, there are differences between the programs that could lead many solution providers to participate in both of them. While Smart Office includes business software from SAP and Intuit, it primarily markets infrastructure products such as HP's printers, Intel-based servers, and entry-level storage arrays. While IBM's Express family includes infrastructure products, it focuses heavily on solutions that integrate middleware and industry-specific applications. To put it another way, the Express portfolio has a much greater emphasis on back-office systems than Smart Office does. Smart Office, however, promotes front-office products that are highly popular, particularly among smaller companies where HP has more market share than IBM.
Of course, Express and Smart Office are just two campaigns within the broader SMB strategies of the two systems vendors. For almost three decades, IBM and HP have fought over the SMB market via a plethora of programs. During the 1990s, HP had a strong ecosystem of SMB partners that enabled it to compete very effectively with Big Blue. Then the company decided to phase out its HP 3000 minicomputer, put its UNIX server customers through a difficult transition to Intel's Itanium processor, and spend more than a year assimilating Compaq. When HP finally refocused on the SMB market in 2003, it discovered that many of its channel partners--especially those that provide industry solutions--were giving a growing share of their business to IBM.
This is a loss that HP may be able to recoup someday, but I doubt that the day will come soon. IBM has done an admirable job of pumping up its SMB partner ecosystem over the last two years, and that has gained it significant mindshare and momentum among mid-sized businesses. That is good news for iSeries customers, as such businesses are the sweet spot for their server of choice. That fact has not been lost on Mike Borman, IBM's new General Manager for the iSeries, who is spearheading a drive to get more business software vendors to commit to the iSeries. I will have more to say about that effort in a future article, so stay tuned.
Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at
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