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IBM Refines its Partnership Strategy for Merged Healthcare, Life Science Groups

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Last Monday, IBM invited around 15 of its “optimized” business partners in the life science and healthcare markets to its New York offices for a two-hour roundtable discussion.

One goal of the gathering, according to Carol Kovac, general manager of IBM Healthcare and Life Sciences Solutions, was “to help us understand what we can do better.”

Kovac, who spoke to BioInform just before the meeting, said that the merger of IBM’s healthcare and life science business units in February was one of several factors that led the company to revamp its broader partnership strategy around the same time. “One of the things that we found is that you quickly run out of bandwidth in terms of how many companies you can effectively partner with, unless you start to put the broader IBM company into the mix,” she said.

In the case of the combined healthcare and life science group — which now represents a $4.8 billion business for IBM — “we have very, very different clients,” she said, ranging from hospitals and payors on the healthcare side to pharmaceutical R&D and academic research groups on the life sciences side. “These are very different enterprises, but we see them all really kind of operating with a common set of guiding forces … so they’re all really part of the same ecosystem, and that’s why we brought our businesses together, and it’s proving to be very productive, and in fact expanding our network of partners.”

Earlier in the year, Kovac teamed with Buell Duncan, general manager of ISV and developer relations for IBM, to create what the company calls the PartnerWorld Industry Network for Healthcare and Life Sciences — an extension of an active partnering strategy that IBM’s life science group has pursued since its launch in 2000.

Duncan said that around 1,600 companies have joined the initiative since it was launched six months ago, and around 550 are in the healthcare and life sciences network. He added that IBM has similar networks for eight other industries right now, but said the “Healthcare and Life Sciences [team] has been a real poster child for the way to do it right.”

The network has been designed to provide a “prescriptive technology roadmap” for independent software vendors and other IBM partners, Duncan said. Companies who join the initiative agree to make their own products compatible with a number of open standards that IBM supports, particularly Linux (see table, right), as well as the company’s hardware and middleware offerings.

IBM’s “enablement guide” for the Healthcare and Life Sciences network is a 14-page “blueprint” outlining core IBM middleware products that can be combined to create 10 different solutions to address what IBM views as the “top five priorities” for each industry. For the life sciences, this includes corporate information asset management, investor recruitment and trial management, clinical genomics, clinical trials management, and annotations and knowledge sharing.

Jorge Alberni, a spokesman for IBM’s Healthcare and Life Sciences business, explained that “there are no requirements for participation” in the basic network beyond “choosing the industry they want to participate in and being a member of PartnerWorld, which can be done online.”

But the network’s hierarchical structure can be a bit confusing for potential participants. “Even their partner manager that I spoke to said he doesn’t understand the different levels of partnering that they have,” said one business development manager for a bioinformatics firm that recently signed up for the program.

Several life science ISVs that BioInform spoke to had similar experiences navigating the complexities of the huge company’s partnership structure, but most noted that the network is a useful framework compared to the prospect of finding their way around the company’s Byzantine organization on their own. “IBM, from our point of view, is a complex organization to work with,” said Werner Eberhardt, vice president of global marketing for Lion Bioscience. “They have multiple business units, and … there’s a certain level of complexity caused by that.”

Oliver Bayliss, director of sales and business development at BioWisdom, agreed. “We’ve got 25 people and they’ve got 300,000, so they’re bound up with red tape and procedures.”

Bayliss said that his company recently signed a partnership deal with a relatively large software vendor, “and with them it was a logical process of working out what we want from each other and then signing up.” With IBM, he admitted, “I’m a little bit lost in the process,” but added that BioWisdom signed up for the partner network “to get on the radar for a more interesting partnership that we’re exploring in an area where we think we have complementary technologies.”

Andrew Chu, vice president of business development at QuantumBio, said that the partnership network has served as an effective liaison between his small company’s computing requirements and IBM’s “big matrix organization.” Using the example of the IT giant’s HPC manager, he said, “you’d [have to] convince him to do this because it will benefit not just the pharmaceutical customers, but … can they take the same thing to geology and aerospace and other types of high-performance environments?”

Climbing the Big Blue Ladder

The hierarchical structure of the partnership network is based on the degree of commitment that ISVs have to IBM technologies. “Advanced” partners “need to be enabled on one IBM hardware and one IBM middleware technology and have a customer installation that includes IBM,” Alberni explained. “Optimized” partners “must commit to Linux or a second middleware, write a solution brief showing how their solution integrates with IBM components to provide a total solution in our industry, and provide a customer reference in our industry.”

As Chu described it, “What they care about when they enable you as an optimized partner is, ‘When you guys make a sale, how much business will you bring IBM?’” But for QuantimBio and others, there are benefits to making that commitment. QuantumBio, which is an optimized partner, is currently collaborating with IBM on a research project to run its quantum mechanical-based molecular modeling algorithms on IBM hardware. The firms are working on a joint publication that Chu said he expects to be “mutually beneficial.”

According to Pat Blake, president of Biomax Solutions, “if you want to be in a market, from a software point of view, you want to be aligned with IBM.” He said that the partnership has had a positive impact on the company’s software sales “in that people who are interested in high-performance computing are very much looking at IBM and their pSeries, and we develop all the software on Linux anyway, so we’re very technically aligned with IBM.”

Blake said that most bioinformatics customers are still using a mix of hardware platforms, “but we’re seeing companies and organizations begin to replace other hardware with IBM hardware and our software.”

Lion’s Eberhardt said that when IBM and Lion announced their partnership in late 2001, “we needed buy-in from top management at pharmaceutical companies, and were hoping that the partnership would bring us in contact with key CIOs in the industry.”

Lion’s business model has since changed, and “the reality [of the partnership] has proven to be a little different than the original perception,” but Eberhart still deemed the relationship “a good thing” for Lion. One benefit, he noted, was the co-development of a relational version of Lion’s SRS system, which enabled SRS to run federated queries.

Chu and Blake both attended last Monday’s meeting in New York and deemed it a success for both IBM and its partners. “I saw my fellow executives from small companies, and we were all able to speak openly and candidly … [which is] not always easy when you get a bunch of executives together,” Blake said. He added that the fruits of the meeting included “good go-forward plans” on IBM’s part for more one-on-one interaction with its partners.

As he explained, IBM has as much — if not more — to gain from these partnerships as the smaller ISVs. “Biomax has been in this market for many more years than IBM,” he said. “So the sharing and transfer of knowledge is very important for them.”

Kovac said that IBM’s partnership strategy has the potential to benefit both IBM and the smaller players in its ecosystem. “Whether it’s bioinformatics or the adoption of electronic medical records or other IT technologies in healthcare, one of the things that’s holding adoption back is fragmentation and the inability for people to kind of put all the pieces together,” she said.

“I think that when an industry is still immature, every small provider has the view [that] we’re going to conquer the entire world. And as you move through a period of thinking this through, I think more mature companies say, ‘There are some things we’re good at, but we’re not going to conquer the whole world, and to be able to do what we’re good at and really grow what we’re good at, we’re going to need to connect,’” she said.

— BT

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