Distributors warm to IBM software model
- 26 September, 2007 11:05
Distributors have given IBM's software group a glowing report now that the dust has settled following major changes to its model.
Big Blue introduced specializations around different software product sets in February last year and slashed reseller numbers from 500 to about 85. The software group's channel manager, Sue Hope, said the aim had been to build value into the model. Not everybody was happy.
Earlier this year, Avnet walked away from IBM software to concentrate on distributing its hardware and several partners have complained that the new model is overly complicated. For example, a reseller wanting to source Web-Sphere business integration, Tivoli security, and DB2 information management software must deal with three separate suppliers.
However, distributors are reporting increased business and greater profitability now that the model has had time to bed in. In addition to earning rebates for hitting sales targets in their relevant brands, they are also rewarded financially for recruiting and enabling partners, number of deals and growing their mid-market business. In the six months to June 30, Hope said IBM software had grown its mid-market business through channel partners by 36 per cent year-on-year.
itX general manager, Greg Newham, said it had seen a growth in the amount of IBM software business it was doing and also improved profitability. He noted greater synergy between IBM's direct and channel sales teams, which had made life easier. "There's no doubting IBM's commitment to the channel. Our business grew 30 per cent in the last financial year," he said.
While the focus has been on improving the skills of current partners rather than mass recruitment, Newham said itX had also reenergised existing Lotus partners following the release of Notes 8.0.
Due to the increased levels of specialisation being built into the IBM software channel, itX runs community events where partners with different skills present to each other and discuss collaboration opportunities. "They often hook up at a later date to go into deals together, especially given the skills shortage the industry is experiencing," Newham said.
Express Data vendor channel manager, David Peach, said it had enjoyed particular success around WebSphere, with sales up by 50 per cent year-on-year, but would still like to add another handful of partners focused on that technology.
"WebSphere is a fairly new brand but we've seen some good results and expect more," he said. "Every vendor talks about partner development and profitability but IBM has taken steps to drive it."
As an example, Peach noted that IBM had run fully funded sales technique training without focusing on its own products.
"That makes resellers feel that a vendor is investing in their business rather than just trying to increase sales of their own products," he said. LAN Systems was added to the distribution ranks as part of the shake-up 18 months ago and has sole local responsibility for growing sales of Tivoli security and automation products. Managing director, Wendy O'Keeffe, was full of praise for the IBM model despite Tivoli still representing a very small proportion of her business. There were only two certified Tivoli partners in Australia when LAN was appointed but the distributor is now transacting regularly with a group of about 15.
"It was attractive to use because of the fit with our Cisco business and because IBM is a good brand," O'Keeffe said. "I like the model because we are paid on performance and it is a non-competitive market so we are sure to keep any business we generate."
On a less positive note, Express Data's Peach said there was some frustration in not having access to all IBM software products.
"In overall numbers it hasn't hurt us but there are times when resellers request products and we have to explain that we no longer carry them," he said. "That can be frustrating for them if they have credit available and want to use it."