International Business Machines Corporation. (NYSE: IBM) recently entered
into a global strategic alliance with Vignette (NASDAQ: VIGN), a developer
of e-businesses applications including CRM software. Under the agreement
Vignette will closely integrate the V/5 E-business Applications suite
with IBM's WebSphere Commerce Suite and Application Server. As part of
the agreement Vignette promises to sell an undisclosed percentage of V/5
applications with IBM products, and IBM agrees not to develop business
applications that directly compete with Vignette. IBM will perform the
installations through IBM Global Services.
is not the first time IBM has partnered with an applications vendor to
cement distribution channels for its products and services. These alliances
have a similar structure. The vendor agrees to optimize its applications
for IBM's servers, databases, and consulting services as well as commit
to selling a percentage of its applications with IBM's products. IBM agrees
not to develop applications that compete with the vendor. There is also
a joint marketing agreement. Recent strategic alliances between IBM and
application vendors include:
28, 1999 - Siebel agrees to closely integrate their CRM applications
with IBM's DB2 Universal Database, as well as optimize for the S/390,
RS/6000, NUMA-Q, AS/400 and Netfinity servers.
7, 1999 - SAP expands their partnership with IBM to include support
for DB2 Universal Databases with mySAP.com implementations.
8, 2000 - I2 and Ariba agree to integrate their marketplace technologies
with IBM's Webshpere platform
5, 2000 - Industrial and Financial Systems (IFS AB) agrees to support
DB2 Universal Databases for their IFS Applications.
12, 2000 - I2 agrees to deliver a percentage of their TradeMatrix
e-marketplace platform on IBM's DB2 Universal Databases.
In an interview
with the Wall Street Journal IBM's General Manager
of Developer Relations, Robert Timpson, stated that last summer IBM decided
not to develop specialized corporate applications. IBM has made over 30
similar alliances that reflect this decision and indicate their focus
on selling servers, databases and consulting services.
Mr. Timpson stated that these alliances are not simply contractual pacts.
IBM is creating strong channel partners that are committed to selling
IBM products. This may have a significant impact on the CRM market as
well as on other business application markets.
currently develop applications that will run on many different brands
of infrastructure components because it allows them to sell their products
to firms regardless of what brand of infrastructure components they own.
Business application vendors may become less apt to do this in the future
if the types of agreements that IBM entered into with Vignette become
widely used. This is because support for other infrastructure products
will take second priority due to the application vendor's contractual
obligation to sell a percentage of their products with the partnered infrastructure
IBM may be stepping on its own toes by signing these agreements. Part
of the reason that the application vendors are willing to enter these
partnerships is because IBM agrees not to sign a similar agreement with
another direct competitor. As the functionality of CRM suites becomes
increasingly broad, it may be difficult for IBM to keep these agreements
with Siebel and Vignette. Both companies offer applications that bring
multiple data sources into one unified view. In twelve months there may
be a significant overlap in their offerings, putting IBM in a difficult
Beyond the capabilities of the CRM application, firms evaluating a CRM
product need to decide if choosing a CRM vendor that is partnered with
an infrastructure vendor makes sense in their situation. The application
vendor should be asked the following questions:
- How many
different infrastructure vendors are you partnered with?
- Are you
partnered with the infrastructure vendor that I currently (or plan to)
- Do any
of your partnerships have joint marketing agreements?
- Do any
of your partnerships require you to sell a percentage of your product
with the infrastructure vendor's products?
will reveal the nature of the CRM vendor's partnerships. Un-partnered
CRM vendors generally offer applications that support a wider range of
infrastructure products. Therefore if you have the required infrastructure
in place to support the application or you would like to make the infrastructure
decision independent of the application decision, selecting an un-partnered
application vendor may be the best decision. Conversely, if you need to
make an infrastructure decision as well as an application decision, and
cost and implementation time are critical, a partnered vendor will make