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IBM's MSP Strategy Takes Cloud Ecosystem to Mid-Market
Posted September 27, 2012
IBM's MSP Strategy Takes Cloud Ecosystem to Mid-Market
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By Jennifer LeClaire. Updated September 27, 2012 1:28PM

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To help small and mid-size businesses take advantage of new cloud computing technology, IBM is expanding its family services and solutions under the umbrella of IBM SmartCloud and PureSystems.

With its new strategy, IBM is betting more clients will look to local technology providers, known as Managed Service Providers, or MSPs, to help them quickly develop cloud-based services in a simpler, secure and economical way as they embrace cloud computing.

MSPs deliver a defined set of technology solutions or services to clients with a pay-as-you-go model. Customers that want to take advantage of cloud technologies but lack the internal IT skills, resources and time -- such as smaller hospitals challenged with adopting electronic medical records -- typically leverage MSPs.

"These new initiatives launched by IBM are unfolding new opportunities for our organization not only to create new business opportunities with clients but also seize the opportunity to expand our global reach," said Craig Gunderson, CEO of Oxford Networks. "The combination of IBM's technical expertise and focus on helping clients drive innovation with advanced technologies and its marketing engine will enable us to move beyond our traditional client base and reach new markets."

Building Industry-Specific Apps

Beyond empowering MSPs to build solutions and services on technologies like SmartCloud, PureSystems, and analytics, Big Blue will also provide MSPs access to IBM experts with deep technical skills at four new global centers of excellence. The company will also offer a set of programs to support MSP marketing efforts to help them build their brands, generate demand for their services, and grow their marketing skills. Finally, IBM will offer affordable financing options through IBM Global Financing to help MSPs acquire new technologies.

IBM has built relationships with more than 1,400 MSPs, such as Perimeter, Symmetry, Velocity, CenterBeam, Oxford Networks, PEER 1 Hosting, Connectria and others. These MSPs are focused on delivering industry-specific capabilities such as helping a small healthcare provider manage digital records on the cloud securely, or helping a mid-size bank enable their clients to securely conduct more and more of their daily transactions via smartphones.

"Because clients today have changed the way they purchase IT, an MSP or cloud provider must demonstrate a level of trust before the managed services relationship starts," said Charles Weaver, CEO of MSPAlliance. "How they market themselves often will be the difference between success and failure.

"This new set of initiatives IBM is launching today reinforces the company's commitment to ensure this community has the right marketing support and technologies to effectively succeed in this segment."

Combating Salesforce Relevant Products/Services.com

The mid-market focus will likely put IBM in more direct competition with current leaders Amazon, Google and Salesforce.com. Shawn Wu, an analyst at Sterne Agee, tells us IBM is well positioned to capture share given its industry expertise and broad set of offerings.

"We view this as a continuation of the company's efforts in cloud in recent years, including building more global centers of excellence, SmartCloud, and acquisitions including DemandTec, Green Hat, Platform Computing, Cast Iron Systems, and Kenexa," Wu said. "We believe IBM's efforts in expanding into the mid-market allow it to capture more of this growing opportunity."

Wu also sees the new effort as a strategic way for IBM to leverage its new PureSystems platform, a next-generation architecture that integrates compute, storage, and networking, and differentiates itself with a built-in expert system and analytics that are optimized for specific applications and workloads.

"Similar to Apple, we believe this is a key advantage for IBM where it can offer a platform-based, integrated solution with its vertical stack of hardware, software and services," Wu said. "We believe more cloud presence will help drive an upgrade cycle."

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