IBM Partners Aim SaaS Offerings at SMB Market

An increasing number of IBM Corp. (NYSE: IBM) application developers are building SaaS offerings to deliver cloud-enabled services to untapped vertical segments in the SMB arena.

Buoyed by IBM’s assistance from development through sales, these ISVs are not turning away from making traditional licensed products, but instead adding SaaS-configurations to their portfolios to capitalize on receptive SMB verticals such as construction, retail, legal, healthcare and financial services.

SMB verticals are enticing targets for SaaS-directed developers partly because businesses in that sector typically lack the funds and resources of larger companies to afford on-site application deployment and management. For smaller businesses, the fundamental benefit of the SaaS model—customers can employ a custom application without incurring development and infrastructure costs—often outweighs ownership issues.

“SaaS is particularly attractive to small and mid-sized companies that might not have the technical skills or available resources to deploy, host and manage applications like customer relationship management (CRM) and enterprise resource planning (ERP),” said Dave Mitchell, IBM director of strategy and emerging business, ISV and developer relations.

Collaborating With Partners

As a case in point, IBM recently detailed its collaboration with iEnterprises, a privately-held $10 million developer, to build and market a CRM application configured as an SaaS offering. A long-standing IBM Premier Business Partner, iEnterprises sought out the vendor’s assistance when it decided to create an SaaS product about two years ago, said John Carini, the developer’s chief executive.

The iEnterprises Empower CRM product is “cross industry by nature,” Carini said. “We built a CRM application that is highly configurable and then we took the configurability to make vertical solutions with it.”

“We had traditional licensed products but we just could not address the smaller markets with them because it was cost prohibitive for customers,” Carini said. “We got leads for the smaller markets, but we ignored them until we decided to create an SaaS product. IBM assisted us with development, gave us technical support during the development process and helped us market the application.”

Monthly subscriptions for the hosted Empower product range from $40 - $50 per user. The product has been on the market for about four months and has garnered about 100 customers so far, Carini said. Sales are bolstered by iEnterprises’ own partner program consisting of about 30 resellers—many of which also are members of IBM’s Business Partner program—in locales throughout the Americas, Europe and Asia.

The trend toward the development of SaaS applications is unlikely to ebb if a recent report by market researcher Evans Data Corp. proves predictive. In the next year, more than half of all developers worldwide anticipate working on an SaaS offering, according to the results of interviews Evans conducted last Fall with 1,300 developers worldwide.