IBM Flexes PLM Muscles in SMB Space

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IBM (Quote) believes that it can turn its brand of product lifecycle management (PLM), sitting atop its Websphere platform, into a dominant enterprise planning hub in the manufacturing sector.

IBM is attempting to expand the traditional definition of PLM (define) into a holistic approach encompassing product design, production, after-sales and end-of-life information processing. The application vendor is hoping to convince customers that its new product development information platform (PDIF) can help stimulate innovation and top-line growth.

Big Blue is pinning its hopes for platform dominance in large part on mid-tier companies, which it defines as organizations with between 100 and 999 employees. To that end, it has signed a joint marketing agreement with product data management (PDM) vendor UGS, which has a strong presence in the small and medium sized business (SMB) market.

The companies have agreed to market UGS applications in six countries: the United States, Canada, France, Germany, Japan and China.

Also as part of the agreement, UGS has customized Teamcenter Express, its PDM application, with the SMB sector in mind and with a particular emphasis on the machinery, automotive, aerospace and defense industries. Teamcenter Express will come with templates and demos pre-configured for those industries, and it includes consulting services priced for mid-tier companies.

Both companies suggested that the templates and consulting services are key to serving companies with IT staffs of four to six employees.

"It's about bringing the power of technology we've brought to large companies, but putting that in a package that is consumable and priced in a manner that is appropriate for a mid-market customer," said Elaine Case, director of SMB at IBM.

This agreement also marks a significant strategic departure for IBM in that it has had an almost exclusive relationship with Dassault Systemes (Quote) in this arena for more than 20 years. While its relationship with Dassault will remain important, IBM wants to signal to its customers that it will support any vendor offering appropriate applications for their needs.

While the rival PLM vendors have a lot of feature overlap, Dassault is more widely known for its CATIA CAD software, whereas UGS is focused primarily on PDM.

"The strategy is really to partner with a variety of PLM application vendors so we can meet a huge variety of customer requirements," Case told internetnews.com.

Both parties stand to gain from this deal: UGS gets the benefit of IBM's huge reach, both in terms of global presence and among enterprise customers, while IBM gets an introduction to mid-market manufacturing companies where it sees the opportunity to gain a substantial foothold.

Case noted that it was her group, rather than the software group heading up the PDIF initiative, that led negotiations for this deal.

She said IBM believes the mid-tier market opportunity represents $255 billion in potential revenues, with some industries enjoying 39 percent revenue growth.

Kerry Grimes, vice president of mid-market and global channel sales at UGS, told internetnews.com that while the initial focus of the agreement is in the SMB space, UGS is also eyeing larger accounts it could win thanks to its relationship with IBM.

Gartner analyst Marc Halpern noted that while IBM can become an important conduit and provide a platform for PLM vendors, the agreement "also opens more opportunities for IBM in industries and classes of applications where a vendor like UGS happens to be stronger."

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