IBM overhauls software channel strategy
- 11 December, 2009 14:08
- Comments 5
IBM is in the final stages of restructuring its software channel to align partners to specific brands and product pillars.
Under the revised model, partners will need to invest in deep and specific sales and technical skills in order to sell licensing for any of the vendor’s five overarching software brands: Tivoli, Lotus, Rational, WebSphere and DB2. Previously, partners were able to sell licences across all brands.
IBM software channels manager, Sue Hope, said the changes were about ensuring partners had comprehensive knowledge of each product and could support customers adequately.
“For the past four years, we have embarked on getting partners to invest and develop deep skills in each product area,” she said. “We have five products and brands with lots of pillars under each – with Lotus for example, we have things like SameTime collaboration, email and Lotus live, which is a separate product. Under Tivoli, there’s the storage portfolio plus automation products like Maximo. And that’s just two brands.
“For IBM partners to sell and have deep skills across all 12 pillars is quite challenging… what’s compromised is the quality.”
Hope insisted partners skilled in just one or two brands could be viable, and claimed a couple of its top revenue earners were partners doing just one brand.
“If you add the services that goes with each of these products, that’s big business,” she claimed.
According to Hope, IBM’s new strategy had also seen several partners formalising agreements with other players to fulfil customer requests for products outside their area of expertise. While the vendor is keen to help foster relationships, it was up to partners to determine the terms and conditions of any such agreement, she said.
“Some partners don’t want to make that investment, but want the relationship with a customer. So many have signed agreements with other partners to cover that and sill be part of the sale,” Hope said. “Cirrus for example, will go into a customer and be introduced by the original partner, then cover that opportunity – they are the reseller of the product to that customer.” IBM also provides deal rebates through its software-based Value Incentive Program for both partners.
The specialisation strategy, which was first announced in January and implemented from September, follows the vendor’s decision to introduce a similar model across its distribution strategy in 2005. While some distributors gained significant clout from specialising, the decision forced niche U2 products distributor, Prism, out of the market.
Hope said Australia was the catalyst for IBM’s global adoption of the model.
Partners have until January 2010 to get their accreditations and choice of brands finalised. Hope insisted partners had time to pick up and invest in other products. The majority of existing partners operated across at least two brands, and about 40 per cent were looking after four brands, she said. There were just three or four partners across all five software areas.
“We don’t want to limit partners by revenue – no partner is too small for us,” she added. “We have more skills in sales and technical certifications that are a requirement, and over a period of months, partners need to have customer references for those products.”
Hope was pleased with the coverage of partners across each of its software portfolios but said there were still gaps in terms of geographic coverage. She highlighted Western Australia, South Australia and NT as key areas for partner recruitment next year.
Nominations for the 2012 ARN IT Industry Awards open on Tuesday, June 12.
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Comments
Unhappy IBM Partner
IBM doesn't understand her partners
IBM and Ms Hope doesn't understand her customers or her partner network. Why would you make it harder to develop and sell solutions with IBM software when other vendors give away their product to partners for free! IBM would rather make money off their partner network than create more customers. I would love to have 20 more partners to compete with even if they weren't as qualified - at least there would be many more voices talking about some great IBM products!
Anonymous
IBM’s “software channel strategy” is a complete joke!
This "channel strategy" seems to be more of a “direct play” by IBM.
IBM sends renewal quotes directly out to end customers. If you as a Business Partner (BP) are not certified in all pillars of that renewal, you cannot transact all of the renewal. With renewal margins low, the difference between IBM’s RRP quote and the BPs quote is often minimal. If the customer has to produce multiple POs for the renewal to multiple BPs, as opposed to one PO that they already have a quote for from IBM, guess what happens: Direct Renewal!
Yes you can always “partner” with a BP that it certified in all or most pillars, but because IBM does not allow sub-distribution of its software products, this “partnering” is essentially introducing your customer to another BP (competitor?) for a spotters fee. Good bye customer relationship.
Talking about customer relationship, if you have been selling to particular customers, IBM software for a number of years, especially if across multiple brands (multiple pillars now), it is likely (unless you are one of the few that get certifications across the 12 pillars) that you will no longer be able to service your customers requirements. BPs are often focused on solutions that meet their customers’ requirements, and not on pushing a vendor’s brands/pillar products. That’s what the vendor is there for!
And let’s not mention IBM GTS, which often directly compete with IBM BPs on deals.
Does IBM really understand the definition of “Partners” & “Channel”. I think not!!
Adam Brown
A positive move from IBM in my view.
I for one believe IBM have made the correct decision. The problem with the previous model for the channel was that Partners that invested in their IBM practises so that they were highly skilled in the software products they were selling would be undercut by uncertified partners that would add no value other than to sell the software for very low margins. This creates an environment that destroys the channel and results in unhappy clients with unsuccessful implementations.
While there is no doubt some short term pain, in the longer run these changes will mean that those partners that invest in IBM certifications will be able to build sustainable businesses. Customers will have partners that know what they are doing with IBM Software and have successful implementations and ongoing partner support. IBM will have happier customers and a stronger channel and increased revenues.
As far as the comment above suggesting that if you partner you will loose the customer relationship that obviously depends on who you partner with. ISW has successfully partnered with a number of other organisations and together we have been very successful. As long as the partners work together with mutual respect and fairness then it can be a good outcome for all.
The reality is that the Partners that are complaining the loudest are those that have not invested in their IBM certifications and skills. They are typically the partners that just sell on margin and don't add any real value to the client. Interesting how the previous negative comments are anonymous as well!
So I applaud Sue and IBM's decision to strenghten the IBM Software Channel and look forward to working under the new rules.
The only comment I agree with to a degree from above is that IBM needs to ensure they don't try and take channel business direct. They need to continue to invest in their Partners to ensure the success of IBM Software across all market segments. IBM should ensure that IBMers are incented the same regardless of the business being direct or thru the channel. That way if the Business Parters are adding value to the relationship and helping close more business then the reps will be motivated to work with them and will inevitably increase the overall market as well as have happier customers with successful implementations.
Certified and unhappy IBM partner
IBM distracts its partners from its customers
IBM software sales outside of the major accounts are insignificant and IBM itself does very little to generate demand that can be fulfilled through the channel.
Whilst the margins sound attractive to target smaller business, the effort and cost required to not only proactively sell but to maintain certifications outweigh any potential returns in those markets. The other markets are almost exclusively direct to IBM. We often find that our major competitors are IBM them self or former IBM employees, working in organisations started by former IBM employees.
The IBM sales material is too American and does not work in the Australian SME market. Time and again, they can not offer any material to position their products competitively against Microsoft. In fact in most cases IBM are marketing and selling Microsoft solutions through their x-series hardware division in competition to you.
In essence, these IBM internal games distract you from engaging with your customers. This new IBM channel engagement model is an outcome of an overpaid bureaucracy that has too much time on its hands with limited real world experience in engaging constructively with customers that may potentially benefit from a successful implementation.
Really Sue, when you are going step aside to let some new blood in with some new ideas that are more pertinent to the Australian market!
Charles
IBM Software Channel
At one conference a couple of years ago, there were 2 IBM presenters, both reasonably well know in the IBM circle, one of them in charge of the entire IBM Partner Channel Model.
Let say that this conference was all of the top resellers from an IBM distributor.
At this conference the channel leader from IBM jetted in to the conference and did a part presentation saying how important that the channel was to IBM, (forgive my lack of accuracy on the numbers) in the presentation it was suggested that some $36M was done through the channel.
In the next part of the presentation, the other person from IBM gets up and says that the entire IBM software model in Australia was (again from memory, we were drunk for most of it) was worth $300M per year in Australia.
At which point some smart spark in the conference asked the question, that if the entire channel is worth 15% of the overall spend why would partners trust IBM to support the channel and continue to invest in them as a brand.
There was not much of a compelling answer, it was rhetoric, eg trust us, we are a channel company, the channel is where it is at etc etc.
I wonder what the figures are now, channel versus direct. As I work in a partner that does not and has not sold IBM software, I am glad that I have not invested in IBM as a technology vendor, not because their products are not good, some indeed are, however if I cannot rely on my partnership to mean anything, and then find that 85% of the business is direct, there is simply no confidence in them as a channel vendor.
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