IBM and a handful of business partners are spending $250 million this year to develop Business Partner Innovation Centers worldwide, where ISVs and systems integrators can brainstorm and demonstrate solutions.

IBM expects to open 40 new centers worldwide in 2006.

Each center, financed jointly by IBM and a partner or partners, assembles products to replicate customer environments for partners to design, test, validate and demonstrate solutions in their own facilities.

IBM announced the new spending at its PartnerWorld conference this week in Las Vegas, as part of a mission to “Innovation That Matters” by collaborating further with partners on solutions built on IBM platforms. IBM also announced a new business unit, Technology Collaboration Solutions, to coordinate the initiative and the invitation to consult with IBM’s internal research department on vertical solutions.

IBM is promoting the centers as a driver of its innovation agenda, by letting partners “tinker,” said Donn Atkins, general manager of IBM’s Global Business Partners, at the opening of IBM’s 96th center earlier this year in New York.

“It is helping customers and partners move to the next step, which is driving the innovation agenda,” he said. “It’s in centers like this, where understanding how you drive innovation—what is necessary, the set of capabilities you need. You build things that don’t come in a box.”

Click here to read about one IBM partner’s plans to leverage an IBM Innovation Center as a demonstration tool.

Partners have since opened centers in Depere, Wash.; Rochelle Park and Denville, N.J.; New York; and Toronto.

IBM also hails the sales-boosting affect of demonstrating solutions in a live environment. Participating partners report centers influence about 40 percent of their annual revenue, IBM announced this week. On average, BPICs drive an 80 percent sales closing rate for client engagements, IBM said.

Partners in attendance touted the centers’ value as a development and sales tool, but were pleased with IBM’s spending.

“You have to be careful when you talk about those numbers,” said Rick Kearney, president and CEO for Mainline Global Systems, in Tallahassee, Fla. “Who are you brining in for demonstrations, but your friends and family. You’re bringing in customers who are likely to buy.”

Mainline, an IBM storage ISV with $500 million in annual revenue, opened a BPIC in October at its Tallahassee headquarters, where delivering an on-site demonstration on a customer’s own system is preferable, Kearney said. He suggested BPICs would be more useful to VARs in more remote locations, a view shared by Tom Amodio, president of Infinity Systems Software, of New York, a mainframe ISV with a BPIC of its own. “The demonstration aspect is more important if you’re in the middle of the country,” he said. “We’re in New York. We bring clients right up to IBM to show them how it works. That matters more if you’re in the Midwest somewhere. First and foremost, it’s a sandbox where you can figure out if the solution works before you even show it to a customer.”

IBM has also added 12 (bringing the total to 31) of its own Innovation Centers, which serve as a local presence for partners in remote outposts worldwide.