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Big Blue courts the small fry

IBM benefits by partnering with small and medium tech companies. Florida is a key center for this outreach.

Published November 8, 2005

TAMPA - Saru Seshadri's tech company has 30 employees. IBM has more than 300,000 worldwide, with more than 1,000 just in its Tampa office. But the two are partners, a relationship that Seshadri says benefits both.

"There are business partners and there are business partners," said Seshadri, founder and president of Tampa's Ultramatics. "We are constantly speaking to the IBM team on a daily basis."

For the privately held Ultramatics and other tech startups, IBM provides resources they can only dream about. For IBM, the small companies develop products that IBM can use in its own consulting and services work, as well as contacts to other startups and potential customers.

These days, IBM, known as Big Blue, is thinking small and medium business. That segment already makes up more than 20 percent of the company's revenue, which was $21.5-billion in the third quarter. And Florida is a key center for reaching out to this segment.

Founded in 2001, Ultramatics offers consulting and business system services from offices in Florida and India to clients such as Blue Cross and Blue Shield of Florida, CSX, Panasonic and United Healthcare. IBM is a client as well.

Ultramatics uses IBM technology in its work and gets access to IBM resources, including virtual innovation centers to test products and even IBM staff to help during development.

IBM also assists Ultramatics and other small companies with marketing.

In return, small companies develop products that enhance IBM's core business and provide IBM access to their clients and markets. That's a shift for IBM, known more for its work with major corporate clients.

"A lot of our startup firms have really helped IBM better serve a broader number of customers than we ever could have in the past because they actually have great applications for customers," said Mark Hanny, IBM vice president for independent software vendors.

Hanny was in the area last week to talk to executives about IBM's "Partner World" program. Big Blue plans other events to build on the 80 Florida businesses that have signed on so far.

It's also another indicator of the importance of the small and medium business market to major players.

In June, Orlando Ayala, in charge of Microsoft's small and midmarket business efforts, visited the area to talk to customers.

Each company emphasizes that they don't directly compete, since Microsoft is software and IBM consulting and services. But they are going after the same market.

Alan Taetle, general partner at Noro-Moseley Partners, a venture capital firm in Atlanta, says IBM provides expertise and a specific contact that helps the firm assess potential investments. In return, IBM gets to check out potential partners.

"There are other companies that have comparable concepts," Taetle said. "But they're not as well executed as what IBM does."

Metastorm, known until recently as CommerceQuest, in Tampa has a longstanding relationship with IBM, according to Paul Roth, the company vice president. Metastorm works on applications and processes that help businesses automate operations.

"A little company looks like a much bigger company because of the relationship IBM extends to us," Roth said.

Hanny calls IBM's program an "ecosystem." In addition to working with venture capitalists and startup companies, IBM also is investing time and money with universities, such as the University of South Florida and University of Tampa.

The company wants more technology integrated into the curriculum across the board, so a more tech-savvy work force heads to the job market.

And it wants to encourage more students to study math, engineering and science.

"This is an area we have to address as a society because they don't have this problem in Russia and China and India right now," Hanny said.

--Dave Gussow can be reached at or 727 445-4165.

[Last modified November 8, 2005, 02:15:36]

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