Tuesday, May 17, 2005

IBM: friend or foe to SAP?

Joshua Greenbaum drills down into the details of IBM's relationship with enterprise software vendors, such as SAP. On the one hand, in order to drive sales of its infrastructure products such as WebSphere and development services from its Global Services unit, IBM promotes custom software development--a position that puts it at odds with major software vendors, such as SAP.

On the other hand, IBM's relationship with major enterprise application vendors pulls through huge revenue at IBM for its database, hardware, and services offerings--pushing IBM closer to vendors such as SAP.

These conflicting motivations came to the surface at a recent press conference. Josh writes,

When asked what guarantees Global Services was willing to give that it was going to remain neutral in the selection of a platform -- bearing in mind that its big applications partners are also selling infrastructure to compete with WebSphere -- you could hear the waffling noises loud and clear. First they said that WebSphere was the preferred platform, but then they clarified that by saying they were technologically agnostic, and that technology wasn't really a major part of the initial SOA [service-oriented architecture] engagements Global Services was working on. Then they said...Well, it doesn't really matter.

The basic problem is that one part of IBM wants to be friend number one to its enterprise software partners, while another part is increasingly packaged software enemy number one.
Josh concludes that IBM's relationship with SAP is worth far more to IBM than any increased WebSphere revenue it realizes from promoting custom software development.

Read Josh's analysis on Datamation.

My take? Customers need to understand the relationships and motivations of their various IT providers, and IBM is a major influence in many IT organizations. Therefore, customers should understand that IBM's reliance on SAP is growing. This is especially true now that Oracle has come out on top in its acquisition of PeopleSoft and J.D. Edwards, which effectively removes a large number of enterprise customers from IBM's direct sphere of influence. This makes IBM's relationship with SAP even more important to IBM, and customers should not be surprised that when they are making major enterprise system decisions, they may see IBM coming down more and more on the side of SAP.

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IBM is a loser in Oracle/PeopleSoft deal

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