IBM to announce $1 billion deals in financial services industry

IBM is expected to announce today joint marketing and development agreements worth about $1 billion with software makers Tig, Yojna and S1, which develop software aimed at the financial services industry, including banks, insurance companies and credit card organizations. IBM has also formed a partnership with CommercialWare, a software provider for the online retail industry.

IBM said its partnership strategy is directly aimed at nabbing projected revenues from rivals such as Oracle, Sun Microsystems, Microsoft, Andersen Consulting and Ernst & Young, which all compete aggressively in the financial services industry. IBM forecasts about $5 billion in sales generated through these deals in the next three years.

IBM is looking to counter a recent revenue slowdown, due in part to lagging hardware sales. Though Big Blue surpassed analysts' expectations last quarter, revenues declined 5 percent year-over-year to $19.3 billion, and most business segments showed flat or negative growth.

Bob Timpson, a general manager at IBM who helped establish the new alliance program, said he expects IBM to make about 20 similar alliances by June. IBM currently has about 50 partnerships in negotiations, he said.

Under the agreements, IBM will integrate applications developed by each partner with IBM's hardware, middleware and consulting and integration services. IBM and its partners will market and sell the combined offerings to joint customers. In turn, the partners involved gain access to new customers and additional sales leads through IBM's extensive marketing and sales resources.

"When it comes to specific applications that may be more specialized, (IBM) will often partner with companies creating those apps," said Andrew Bartells, an industry analyst at Giga Information Group. IBM benefits by "making clients feel they are getting more value" by receiving the application integrated with IBM's wide range of hardware products as well as consulting and services support, he said.

"This is part of a longer-term strategy and business approach that IBM has taken for a half dozen years in which they moved away from 'IBM only' to 'IBM and partners,'" Bartells said.

Other recent strategic alliances inked by IBM include a March deal with supply-chain management software developer i2 and business e-commerce software provider Ariba in an effort to expand IBM's services and tap the growing business-to-business e-commerce trend.

IBM also recently expanded its partnership with front-office software leader Siebel Systems to jointly sell, market and support Siebel's customer relationship management (CRM) software. CRM software helps companies automate and manage their sales, marketing and customer service needs. As part of the deal, Siebel is using IBM's DB2 database to support its front-office software suite, a strong move against rival Oracle, which Siebel customers widely used in the past.

The partnership with London-based Tig is IBM's first alliance targeting the insurance industry. The companies plan to jointly sell Tig's Innovative Claims Management product, an application used by large insurers to help them deal with claims management and requests more easily and at a lower cost. Industry analyst firm TowerGroup predicts the market opportunity for claims management software will reach $7.4 billion worldwide.

Under its deal with Farmington Hills, Mich.-based Yojna, IBM said it will promote the software maker's FinancialNet product line to midsized banks. Yojna, which makes Web-based software that lets banks provide their customers with online transaction services such as daily account reporting, said IBM will promote its software as part of IBM Global's mid-market e-business program within the United States, Puerto Rico, Canada, Latin America and the Caribbean.

In turn, Yojna, which has been a partner of IBM for the past eight years, said it has agreed to replace Microsoft's SQL server with IBM's Netfinity server and DB2 Universal database, along with other existing Microsoft products.

IBM is tackling larger financial institutions under its alliance with Atlanta-based S1, whose S1 Corporate suite of applications helps large banks offer their corporate customers a wide range of cash, asset management and other banking services via the Web.

Separate from its push into the financial services industry, IBM has also inked a similar strategic alliance with Natick, Mass.-based CommercialWare, a software maker that provides applications to businesses building online retailing sites, such as online order management, fulfillment and customer service. The companies will combine CommercialWare's software with IBM's hardware products and consulting and systems integration support from IBM Global Services, the PC maker's services arm.

IBM's Timpson said the company will continue to aggressively partner with companies "leading in their segment" or in certain geographic regions.