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Microsoft Partner Phase 2 Adds IBM's Hosted Apps

Phase 2 International now offers online IBM Lotus applications to small-to-medium businesses (SMBs), adding to its various hosted service offerings, which already include a Microsoft solution stack.

The Honolulu-based company is a Microsoft Gold Certified Partner that provides hosted solutions to SMBs worldwide. With its hard launch of its "Lotus on Demand" solutions on April 8, the company becomes a full-fledged IBM Business Partner too.

"The philosophy of Phase 2 has always been about bringing best-of-breed products to the market, and it's never been a vendor-biased type position," said Kevin Doherty, Phase 2's CEO.

The new hosted IBM solutions include Lotus Notes 8.5 for e-mail and Lotus Sametime, which is a standalone instant messaging/collaboration solution that integrates with Notes. (A plan for integrating Sametime with Microsoft Office Communications Server is in the works for this year, according to IBM.) In addition, Phase 2 offers IBM's Lotus Quickr, a document management platform that's Web 2.0 enabled. Doherty said that Quickr competes with Microsoft's SharePoint, calling it a "very capable platform" and "very simple to use," allowing customizations that don't require developer support.

Finally, the Lotus on Demand suite includes Lotus Connections, which is a social networking portal designed for internal company communications, although Doherty added that it also enables federation with outside organizations.

"We're very excited about the prospects of that product [Connections]," Doherty said. "Specifically, that's what's been the most difficult from a negotiation perspective with IBM because our goal was to bring this product to market for $2.99 a seat per month. They weren't really excited about that. If you wanted to buy single license for this product it's almost $200. So when they sell this project, it's usually a seven-figure project."

Doherty said that Phase 2 began talks with IBM's back in August of last year after IBM approached the company. Initially, Phase 2 was skeptical that it could offer IBM's hosted solutions for its SMB customers, since IBM's products are typically designed for Fortune 50, 100 and 1,000 companies. However, the SMB market is something that IBM is trying to address.

"IBM is very interested in this small segment of the market," Doherty said. "And by 'small' I mean by employee count -- it really encompasses about 80 percent of the businesses across the U.S. Frankly, they don't focus on it. They focus at the top, and we focus basically at the bottom, and that's why there's a synergy between the two companies and the partnership will work out."

IBM's and Microsoft's products do address two different markets, he added, and Phase 2 offers its SMB customers the option to use either. However, Phase 2's main focus is on its customers, who, in many cases aren't experts in software and just have problems that need solving.

"We have a lot of nonprofits," Doherty explained. "A lot of them aren't sophisticated or savvy from an IT perspective."

Offering IBM's and Microsoft's products has meant keeping two technical skill sets going at Phase 2.

"We really have established two firm camps within the company," Doherty said. "And they are two completely different skill sets -- one's .NET, the other's J2EE and Java. It's painful, but we've just got to roll with that."

The product lines have some gaps. IBM Lotus doesn't have a CRM product, whereas Microsoft doesn't really have a corporate social networking product, Doherty said. Still, Phase 2 is satisfied partnering with both companies. Microsoft is a little more advanced partner-wise because it has had its SPLA (Service Providers License Agreement) package available for three or four years. However, Doherty said that IBM "has been very supportive."

IBM launched its LotusLive solutions in January, eliciting critiques from Microsoft officials, including a claim that hosted Notes has scalability limitations. Doherty described how Phase 2 handled it.

"The Lotus Notes platform -- it's very sophisticated," Doherty said. "That can scale pretty good, but it does involve a lot of clustering and a lot of sets of clusters. So you can continue to scale, but does get a little bit complicated. But the same could be said about Exchange and your backend SQL clusters."

Phase 2 hasn't quite hit the wall when it comes to scaling out Lotus Notes.

"I think if we got to point where we were hosting hundreds of thousands or millions of clients, a lot of these problems would become more apparent," Doherty said. "But we're going to have to take a wait-and-see approach and hope we won't have that particular problem."

Phase 2 currently hosts applications for SMBs worldwide from its servers in Hawaii, Chicago and Washington state. Company info is available here.

About the Author

Kurt Mackie is online news editor for the 1105 Enterprise Computing Group.

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