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Budget Compliance by IBM For SMBs

Few issues have generated as much teeth gnashing among small and mid-sized businesses (SMBs) as regulatory compliance in the post Sarbanes-Oxley era. And cost has been the principal reason.

IBM says its hosted solution, called IBM Workplace for Business Controls and Reporting (WBCR), will help companies meet their requirements without cratering their budgets.

However, the Armonk, N.Y.-based company also recognizes that earlier generations of software-as-a-service (SAAS), such as ASP, failed to meet basic customer requirements, such as customization and response times. That's a problem where mission-critical applications are concerned.

"Some of those [offerings] did not pan out," admitted Bethann Cregg, director of SMB Solutions at IBM.

But Cregg insists that "its time has come again."

If so, the reemergence of ASP as SAAS couldn't come at a better time for software companies, particularly in the maturing enterprise market where growth is slowing as customers reevaluate the need for new feature sets, most of which go unused.

Philippe Vincent, a partner in the High Tech Strategy Practice at consulting firm Accenture, explained that SAAS could be a response to what he calls the "good-enough crisis" afflicting the software industry.

"The bulk of enterprise software is growing at single-digit rates. This creates the opportunity for SAAS to be compelling," he told internetnews.com. "No one is getting rewarded for introducing new features."

According to Vincent, SAAS providers should focus on the ability to deliver tailored solutions, rather than relying on a one-size-fits-all approach..

"[Software makers] were counting too much on the Internet and their scale alone," he said. "Economies of scope -- how many components you control, not the size of your data center -- is what is making the model work now."

Larry Bowden, IBM's vice president for Workplace Software Solutions, agreed that in the past, solutions developers neglected to take the delivery mechanism into account when designing a product.

"The code did what the code did," he said.

But Bowden told internetnews.com that IBM has learned this lesson, tailoring WBCR for hosted delivery.

"We've changed the way the product is built for the medium," he said.

For instance, IBM has addressed response time concerns that were the subject of complaints from ASP users, offering 1MB per second and 3MB per second burst rate capacity.

He added that IBM has built more flexibility into the product and that versions are available for commercial companies, government, and for the compliance needs of companies operating outside the United States.

For now, because of the cost savings that it offers, IBM is focusing on the SMB market, because most of those companies lack the resources to add and integrate software required to meet the demands of compliance requirements.

"They don't have the IT shop, back-up and recovery, or the facilities to protect the critical data," added Bowden.

This is an especially key issue in the new compliance environment, where companies have to prove that their data is accurate.

"Compliance is one of the hot areas in software," agreed Vincent.

Hosted solutions can be particularly attractive to the SMB market, where IT spending on compliance can be a huge burden. Cregg said that, for 25 to 75 users, WBCR is priced at around $100 per user per month.

"Compare that to the cost of purchasing hardware and 24-hour support in-house," she said.

Vincent cautioned that vendors offering SAAS need to make the value proposition clear to the end users. They should focus on total cost of ownership and speed to value, rather than a dazzling array of new features, he said.

Bowden said IBM sees another benefit to SAAS, which is greater customer intimacy. Compared to putting a product in a box and shipping it to the customer, IBM can observe customer behaviors and add necessary functions more quickly.

"We can implement it only once and test it once on one platform and then offer it to all our customers," said Bowden. "Over time, customers see that we provide them with a more responsive environment."

Vincent agreed with this assessment. "You get to see how your customer uses the product; you see what they do with the application and what they don't do."