IBM Corp. and Lawson Software Inc. are expanding their existing relationship to jointly target small and midsize business users, initially in North America and three specific industries.
All applications vendors, including Microsoft Corp., Oracle Corp. and SAP AG, see the SMB market as a huge source of future revenue and each company is coming up with ways to hone in on that sector which, unlike the enterprise applications space, lacks clear market leaders.
Under an agreement announced Thursday, IBM will be able to resell Lawson’s S3 and M3 applications in North America, and will be involved in the development of the software for users in the financial services, fashion and food and beverage industries.
Lawson will collaborate with consultants from IBM Global Business Services and the vendor’s hardware, software and sales staff to come up with ways to solve business and technology issues specific to those vertical sectors.
The agreement builds on an existing relationship between the two firms centered around helping users adopt SOA (service-oriented architecture).
“This has been a long time coming,” said Harry Debes, president and CEO of Lawson. “We’ve been talking for IBM for almost a year.” Despite adding additional sales staff at a rate of 50 to 60 hires planned for this year, Lawson found itself unable to go after as many SMB users as it would like. “The IBM relationship will dramatically increase our reach,” he added. Like IBM, Lawson defines SMB users as companies with annual revenues of between US$100 million and several billion dollars.
IBM has previously resold Lawson software outside North America, notably the M3 applications Lawson gained from its 2006 $480 million purchase of Intentia, but on a very ad hoc basis, according to Debes. “There was no formal agreement around it,” he said. “We’ve crafted this agreement so it could become the basis of a global agreement.”
The plan is to see how the relationship with IBM works in North America over the course of the next 12 months and then determine whether to widen its scope to other countries and other industries. “We wanted to walk before we can run,” Debes said. He reassured Lawson’s resellers elsewhere in the world that any future moves within IBM would take place taking into account existing partnerships. “At the same time, we don’t want to become overly dependent on one channel for revenue,” he added.
The other industry sectors Lawson focuses on are health care, retail, government and education, manufacturing, wholesale distribution and service and rental.
IBM and Lawson already have around 3,000 joint customers, but Debes said, “There wasn’t very much togetherness” about how those sales were achieved. He’s hopeful the new formalized relationship will result in significant new business for Lawson.
Debes isn’t worried about the continued speculation that IBM might re-enter the applications market, which it quit in 1999.
“It doesn’t keep me up at night,” he said. “I firmly believe they will be in the apps space. They’re not pretending to be in the ERP space, they already are.” He pointed to IBM Italy’s recent acquisition of several ERP companies. “They’re smack dab in the middle of the ERP market. It’s not a question of if, it’s a question of when,” he added. “If they’re wise, they’ll look to do partnerships with Lawson, if they’re foolish, they’ll do SMB partnerships with SAP.