VARs key to IBM's utility model

Big Blue takes wraps off first phase of strategy aimed at SMEs

Resellers are set to play a vital role in IBM's utility computing model as Big Blue takes the wraps off the first phase of its strategy aimed specifically at SMEs.

Just weeks after new chief executive Sam Palmisano pledged $10bn to its per-use computing model (CRN, 11 November), IBM has admitted the strategy will not work without its channel partners.

The utility computing model will provide accounting, human resources (HR) and customer relationship management applications over the web on a usage-based charge. Customers will receive a single monthly or quarterly bill from IBM, but systems are managed by IBM resellers.

Michael Riegel, manager of IBM's global marketing management team, said: "We are moving to a more on-demand world and IBM wants to be a part of that. We cannot achieve this vision without our partners. Independent software vendors, systems integrators and VARs play a critical role.

"If we can run HR, accounting and back-office functions together with our partners, it enables the customer to focus on their core business."

Riegel claimed utility computing provides a strong value proposition for channel partners because it allows for fast implementation and is attractive to customers because of its low price points. Resellers also get a guaranteed revenue stream from IBM, he said.

Paddy Lawton, chief executive of VAR Digital Union, has been working with IBM to bring utility computing to its clients. "Customers will definitely buy into this model because the costs are not as high as conventional IT, and this is ideal for smaller businesses," he said.

Lawton added that utility computing enables VARs to bring customers in on a basic level and encourages them to take on more products later.