IBM makes cloud-friendly partner licensing, financing shifts

CloudsIBM Monday afternoon announced a new licensing option for independent software vendor (ISV) partners and a zero per cent financing promo, both designed to further bolster its cloud computing efforts.

The two new programs, introduced at its IBM Impact event in Las Vegas, further Big Blue’s push with its business partner towards the cloud – a market IBM sees as a $7 billion (U.S.) opportunity for itself by 2015.

The new programs follow two months after IBM made its formal push into the cloud with the channel, rolling out its Cloud Computing Specialty and Cloud Computing Authorization programs at the IBM PartnerWorld Leadership Conference in Orlando in February.

“This is a continuation of that story, getting into a very important piece, the pricing and financing models of the cloud,” said Dave Mitchell, director of strategy for ISV and developer relations at IBM.

IBM announced a new pricing model for its middleware offerings, including WebSphere and DB2, allowing developers of cloud-based applications to consume the software in a more cloud-like utility model.

Under the plan, ISVs building out cloud-based apps can choose to buy the IBM middleware on which their apps run up-front as normal, or can opt for a monthly payment model based on how much of the applications they use.

“For anyone looking at the characteristics of cloud computing, this pay-as-you-go or subscription type of pricing is a key part,” Mitchell said. “Our application developers delivering SaaS solutions tend to offer via the subscription model, and in response to that, we’re aligning our middleware pricing with how they charge.”

The plan borrows many components from the cellphone industry. Users sign on at a certain level of usage, and get more usage at a cheaper rate per unit with larger packages. Users also face overages should they exceed their limits.

Mitchell said IBM is targeting three distinctive groups with the program:

  • Startup ISVs who are short on capital on-hand and may not be sure of the level of demand they face;
  • Existing IBM ISVs who may prefer utility-based pricing based on monthly or seasonal fluctuations in usage patterns; and
  • Users of other Java-based stacks, such as software rival Oracle, who are looking for “a cost-effective way of doing cloud,” Mitchell said.

Mitchell said Big Blue tested the program in pilot stages for “about a year,” giving it time to make sure it had the model right before going public with it. The program also offers the ability to “mix and match” IBM middleware offerings – the purchase of WebSphere and DB2 resources, for example, can be combined to represent a higher level of usage and therefore a more attractive rate.

The second promotional amounts to a “jump start” financing offer for solution providers building out their own cloud offerings or building private cloud infrastructures for their clients. Under the IBM Global Financing umbrella, Big Blue is offering zero per cent financing for cloud hardware, software and services deployments of $300,000 or less ($500,000 or less in the U.S.). For deployments larger than that, IBM Global Financing offers the ability to defer payments up to six months.

Both financing options are designed to help business partners deal with high capital investments required to build out clouds. The whole goal of cloud is to switch IT investment from capex to opex using utility pricing, but somebody has to pay to build up the utility.

The financing promotion is available through the end of the year, at which point Mitchell said it would be reviewed, and may be renewed, altered or discontinued.

Both of the new promotions are open to the whole of IBM’s channel base, and not just those under its new Cloud Specialty or Cloud Authorization, though Mitchell said the hope was that partners taking advantage of the programs would build up enough of a cloud practice to make it worth the while to get involved under the new program.