IBM is stepping up its efforts to help software makers make a transition into the business of “software as a service.”
IBM launched a program offering tools and support to help software makers roll out the new business strategy, a move away from the industry’s traditional licensing model. With software as a service, one company hosts the software application, such as for payroll management or accounting, and provides those capabilities remotely for client companies.
Big Blue is hoping to expand its network of 70 software-as-a-service applications partners in a bid to provide a more flexible alternative to offerings from competitors such as SAP AG, Oracle Corp. and Microsoft Corp.’s Great Plains unit.
IBM’s move is part of a trend in the software industry as it diversifies away from the traditional model of selling software as a product. The service model allows customers to pay for usage and is seen as reducing the risk and costs of owning and maintaining software for information-technology buyers.
The software-services model is taking hold after originally falling short in the late 1990s. Research firm IDC estimates that the software-as-a-service market will grow to a $10 billion industry by 2009, from $4.2 billion last year. “It’s a market that’s finally coming into its prime,” said Laurie McCabe, vice president with market-research firm AMI-Partners.