IBM Increases Software As A Service Support

With Software as a Service (SaaS) growing at a rate of about 25% a year according to a recent study, IBM on Thursday announced new resources to encourage application providers to develop and deploy new business software that will be delivered as services.

"We've found an enormous growth in the number of application vendors moving to this model," says Dave Mitchell, director of strategy for SaaS at IBM. "We have also experienced a lot of requests from software developers asking us to help them go to market and increase the visibility in the market for their on-demand products."

The market for hosted software will grow at a rate of 25% a year to total around $10 billion in 2009, according to Pacific Crest Securities. More than 78% of more than 500 businesses across a variety of vertical industries are currently using or considering using SaaS, according to an AMR Research study. Only 18% said they have no plans to consider SaaS.

The new IBM services for SaaS are designed to help application developers change their software to a SaaS model or begin making the transition, Mitchell says. A major emphasis will be in encouraging increased participation from channel partners such as systems integrators and value-added resellers to encourage use of SaaS among their customers.

IBM's SaaS business has seen its channel network partner participation grow from about 50 participating partners a year ago to more than 100 today, with a goal of doubling the number of participating partners within the next year, Mitchell says. Channel partners will now receive a 10% referral fee in return for submitting a lead to a SaaS provider that results in a closed business deal. IBM will also provide its partners with access to its sales force to help close opportunities faster and gain credibility by using IBM's sales experts locally.

Mitchell says virtually all emerging application software vendors are either leading with a SaaS model or using it as their sole product delivery mechanism, and many large, established application vendors are also increasing their use of SaaS. A recent example was SAP, which recently chose to use IBM as its hosting partner for its CMR on-demand product.

IBM has provided workshops for software developers interested in SaaS in the past, but now is making the workshop information available online through Virtual Innovation Center support. Developers can access the virtual workshops on hardware, software, and services support provided by IBM. Participants can also attend instructor-led workshops by accessing Web conferencing technologies.

IBM doesn't plan to offer its own software in a services model, Mitchell says. IBM has previously exited the applications software business, but its office productivity software, such as Lotus Notes, can be purchased in a hosted model, he says.