IBM Banks on Itself With Performance Protection Plan

Poised for a comeback? Gartner Group predicts the ERP market will improve 10 to 15 percent in 1999 and 2000, 20 to 25 percent in 2001 and up to 30 percent in 2002.

IBM has been touting the AS/400 as a strong ERP platform for a number of years. Now, IBM is putting its reputation on the line with the announcement of a Performance Protection Plan for customers implementing certain enterprise resource planning solutions on AS/400e servers.

The new program was created to ensure that an AS/400e running ERP solutions from Intentia International AB (Rosemont, Ill.), J.D. Edwards (Denver), SAP (Chesterbrook, Pa.) or System Software Associates (Chicago) will perform at a predetermined level. If the AS/400e does not support the anticipated business workload during the first two years, IBM will upgrade the server's memory, DASD or processor--or all three--at no charge.

"We know how reliable the AS/400 is for the ERP market," says Greg Talvalsky, worldwide AS/400 industry and ERP manager. "This is our way of showing our confidence in the AS/400 and giving customers assurance that the AS/400 will operate at a strong level."

The Performance Protection Plan is available through IBM Business Partners and is part of the IBM Enterprise Resource Planning Solution Series. Customers are guided through the selection process, helping them to match a specific AS/400e server to meet their ERP solution needs based on the anticipated workload projections. All four ERP companies are involved in the decision-making process. "For instance, we'll do an analysis with J.D. Edwards, and they'll help us choose which AS/400 is the best fit for the ERP solution and the workload," Talvalsky says.

"It's a competitive edge type of thing," says Bruce Bond, research area director for back-office business applications with Gartner Group (Stamford, Conn.). "IBM is trying to position itself as the easy choice for ERP vendors."

ERP customers can join the plan for free, but there are some prerequisite services and software they must buy so IBM can make sure they choose the correct AS/400 model and configuration to support the workload. Some of the services and software they must buy include a pre-production performance evaluation, a service line contract and PM/400 performance monitor software.

As time goes on and IBM begins to analyze the results, Talvalsky says the company will consider adding other ERP companies to the protection plan and will also look to extend the plan to all the solutions that can be pre-installed on the AS/400.

Although Bond says time will tell how effective the plan is, he feels IBM will win some deals with the performance plan because the AS/400 will represent the easiest choice for ERP vendors. "With ERP vendors it's all about good partner selling because these days it's impossible to get one stop shop," he says.

Giles Butler, business development manager for SSA, shares Bond's assessment. "When you combine eBPCS (SSA's AS/400 ERP solution) with the Performance Protection Plan, it gives customers a total solution," he says. "Customers won't have to worry about going to the board and asking for more money to implement these solutions."

Talvalsky points to a study by META Group (Stamford, Conn.) as an indication of how strong the AS/400 is for ERP solutions. In the study, META Group conducted a survey on SAP R/3 implementation and operation on three different platforms--AS/400, Windows NT and Unix. The study finds that the implementation time on the AS/400 averaged nine months, compared to almost 15 months for Windows NT and 13 months for Unix. Furthermore, the study also finds that the implementation times of newer SAP R/3 AS/400 installations were significantly lower--4.7 months--when compared with earlier SAP R/3 AS/400 installations--almost 11 months.

SSA's Butler also praises the AS/400, saying it has made tremendous gains since 1997, and that it has higher reliability than Unix or NT.

Despite the META Group study and the fact that he feels it is a strong ERP platform, Gartner's Bond says he has seen nothing to indicate that the AS/400 is growing as a choice for ERP consumers. "We see it as a very strong platform for mid-sized companies with small IT staffs," he says. "But we don't see it gaining in popularity. It still has an image problem. It's viewed as old technology despite the fact that it's very good for that environment."

IBM's Performance Protection Plan comes at a time when the ERP market is still in a state of flux. While admitting the plan is one way of trying to resuscitate the ERP market, Talvalsky says it also is an indication that IBM does not expect the down times to continue. "From an IBM perspective, we're confident that the ERP market will take off," he says.

While Bond also expects the ERP market to pick up, he says it will not occur as quickly as some think. "If people think the ERP market is going to take off dramatically in the first quarter of 2000, that's not going to happen," Bond says. "It will improve, but it will not be growing at the 35 to 40 percent rate that it experienced in the past." Gartner Group predicts the ERP market will improve 10 to 15 percent in 1999 and 2000, 20 to 25 percent in 2001 and up to 30 percent in 2002.