IBM’s Mid-Market Push: Posting Notable Progress with Industry Solutions and Business Partner Engagement

Beth Vanni – Director, Market Intelligence – Amazon   Consulting

IBM is hell-bent on become the preferred technology and services provider for mid-market customers – Globally. And in true big-Blue form, they‘ve got thousands of people and a lot of money focused on getting there. With nearly 25% marketshare across their broad portfolio in the mid-market globally, they’re starting to gain meaningfully broad traction in the sub 1000-user customer space. Fundamental to their route to market approach will, of course, be their broad business partner community. But can IBM truly create the simple product solutions, services offerings and local field engagement to act as one, integrated technology provider in this space? And, do they really have the right profile of partner to represent complete industry-focused solutions to mid-market customers?

Steve Solazzo, IBM’s General Manager of the General Business Unit, himself admits that “IBM has a long way to go in the General Business space” to truly dominate. “But, we’re the only company who has it all, and that is our key competitive differentiator,” Solazzo also stated. Clearly, IBM has the broad resources and pedigree to dominate in this market. Their massive product portfolio of systems, storage and infrastructure software has continually been reconfigured, repriced and repackaged to be tuned to the down-markets. Aside from their many “Express” and “Express Advantage” offerings of past years, they’ve accumulated another 22 horizontal solutions built on their leading ISVs’ applications, designed and tuned specifically for the mid-market. Their industry-specific expertise is well-known, yielding product + services combinations targeted at very specific micro-vertical segments, e.g., Food and Beverage Wholesaling, Retail Merchandising. And, they have plans here to roll out another 10-15 such industry solutions in 2010. Lastly, their professional service sales and delivery capabilities and IP are legendary, albeit historically very enterprise focused.

So, assets have never been their concern. The real risks to widespread mid-market share gains remains the breadth of their product portfolio and level of integration between product families, their complex business processes and the ability of their business partners to harness all their sales and market resources to fully represent the “total IBM brand experience” to customers.
Despite the successes IBM has experienced in the past with business partners in this market (remember the AS400 platform and all of its vertical ISV mid-market solutions?), the company has worked hard to come to terms with where it has gaps in their partner coverage and capabilities model; gaps in product competencies (Business Intelligence, SOA application development, virtualization), gaps in industry expertise and gaps in service delivery capabilities. They are actively recruiting partners to fill those gaps, with 5000 partners recruited in 2009 just to address the 140 countries represented by their emerging markets focus alone. Several IBM execs I met with admitted that partners which have been firmly entrenched in delivering industry solutions and IT services to the mid-markets have not necessarily been their traditional hardware integrators, in many markets.

As IBM anticipates the celebration of its centennial birthday, most company execs admit that their legacy enterprise-level sales and market approaches has made them very difficult to do business with. They continue to focus on a myriad of ways to be simpler, and their “Extreme Simplification” initiative seems to be gaining momentum internally. Taking quarterly incentives for business partners from 36 product sales targets down to 6, making growth incentives “recession proof” by paying out from dollar-one and changing pricing approval turnaround times from days to hours are just a couple of examples of work being done to streamline IBM’s operations. But, making a mid-market solution easy to get trained on, configure, price, quote, transact and service for a VAR servicing a $100m 6-store electronics retailer, for example, will require IBM to continue to exhaustively evaluate their business processes and channel program structures for simplicity. There is definitely ongoing work to be done.

The last major risk IBM is facing in broad mid-market traction through business partners is competition with its own, large services unit(s). There is still a dollar-for-dollar quota for every IBM field rep (partner facing or direct) to sell the entire product and services portfolio. Despite the fact that I was strongly encouraged by the level of unique assets and software being made available by the Global Technology Services (GTS) and Global Business Services (GBS) teams, partners still have to overcome their fear and any past points of conflict around a labor to labor deployment battle with IBM G.S. IBM doesn’t monetize services unless they license some IP, acts as prime or act as sub to the business partner in services delivery. In their most recent financial earnings announcements, 57% of total revenues came from services, 22% from software and 21% from servers. In a world were partners are increasingly trying to create annuity revenue streams and differentiate themselves based on unique services, I fear it will be some time before the core of IBM’s business partner community is fully engaging across the GTS services portfolio in a truly collaborative fashion.

As Steve Solazzo so eloquently stated, “It takes a long time to build credibility in a market, and even longer to change it.” IBM is more internally aligned and committed to long-term success in this market than I’ve ever seen them be. And, the resources being poured into sustainable marketshare gains here is enviable for any manufacturer, including HP, Cisco and Oracle/Sun. It will be interesting to watch if all the stars can align this time to finally bring the “IBM brand experience” to this space – and through a partner community who truly believes they can wade through the maze of products, solutions, services, programs and incentives to confidently represent IBM as a mid-market friendly company.

How Social Are Your Partners?

By Sandra Glaser Cheek – Director, Client Services

Every time I begin to blog about social media, I pause and think of how my inbox is assaulted on daily basis with invitations to attend/participate in social media events, webinars, etc. Everyone is talking about social media in the channel, but up to this point, we really haven’t seen our clients doing much about it – and especially not “with” their partners.

No doubt, social media is important in today’s marketing mix. But how much it is embraced by Channel Marketing organizations seems to be directly related to how a company embraces social media in general. And, it’s practically unheard of for vendors to include social media as reimbursable activities in their MDF or incentive funding programs.

Q4 2009 Check-in

done

By Diane Krakora, CEO

Diane speaks briefly about  partnering priorities this quarter that could very well expand through 2010, including partner program refreshing, optimizing channel spend, breaking into new markets, and internal and external channel sales training.

Getting Back to Basics

By Sandra Glaser Cheek – Director, Client Services

Often when we work with clients on their channel communications strategies, our social media recommendations bring on a mountain of questions and concerns. There is a lot of apprehension around developing a social media strategy. Questions like getting executive buy-in, integration of internal teams that will engage partners in social technologies, which tools and platforms to use, etc., often come up. Not that these aren’t good questions – they are. But they really miss the point. I’d recommend borrowing a basic journalism approach and starting with the “Five W’s” (and one “H”) questions instead:

WHO are you trying to reach?

WHAT are your objectives, and what are you trying to accomplish?

WHEN and HOW is the best time and way to reach them?

WHERE do these people spend time online?

WHY do they care about what you have to say? What is the value that you bring to the table/conversation?

When formulating your channel social media strategy, what are some of the questions you think are important to start with?

OPN Specialized at Oracle OpenWorld 2009

Beth Vanni shares her thoughts on OPN Specialized with Lydia Smyers immediately after the launch of the program at Oracle OpenWorld 2009.

Lines Drawn In The Sand: Are Oracle’s Partnering Efforts Ready to Stand Among its New Competitors?

Beth Vanni – Director, Market Intelligence

October 12, 2009 –  Oracle OpenWorld 2009:   As Sun Microsystems’ Chairman Scott McNealy literally passed the baton to his “better capitalist” colleague, Larry Ellison, it became clear on stage to most OpenWorld attendees that Oracle is entering a new league.  When the Sun acquisition becomes final for Oracle, targeted for January 2010, Oracle will join the short list of enterprise computing platform mega-vendors, namely IBM, HP, and Cisco.  But, will the Oracle Partner Network measure up to the maturity of the world-class channel engagement and support programs offered by its peers?

HP DOUBLES-DOWN ITS BET IN THE DATA CENTER: Announced Enhancements to PartnerONE Program

Beth Vanni – Director, Market Intelligence

Today, HP announced enhancements to its PartnerONE program aimed at increasing its focus on data center solutions through its enterprise channel partners.   Since Cisco announced its unified computing system strategy earlier this year, HP’s focus on its data center and ProCurve networking solutions channel partners has been a top priority.   Today’s announcements include both new program requirement as well as sales, marketing and financial benefits.

The Clouds Begin To Part: Where Do Distributors Fit After The Storm?

A View on the Vendor/Distributor Relationship from the GTDC Annual Summit
By Beth Vanni – Director, Market Intelligence

Top channel support functions that distributors help with to increase ease of doing business for vendors’ partners (Amazon Consulting Cost of Complexity Study)

At last year’s Global Technology Distribution Council (GTDC) most of the conversation was about access to capital and credit.  The bottom of the recession was looming straight ahead and the fear about IT product demand drying up was very palpable.   Fast forward 12 months.  This year’s event is decidedly more optimistic.  The major distributors have undoubtedly had a tough year, along with their major vendor partners, but by all indications of average selling prices, unit sell-through and pipeline forecasts, the major distributors think we’re all climbing out of the bottom of the trough.

The Texas Titans Gang Up: Perot Systems and Dell Make Enterprise Services Play – Late to the Game

For me, it’s a pretty simple debrief.  Dell has been increasingly trying to gain relevance in the enterprise, with both servers, storage and services.

They had no real comparable services arm to compete with EDS/HP or IBM G.S.   They are worried about getting further commoditized at the device/PC level and about not having an offsetting high margin services play.   They’re smart enough to know they can only streamline their cost structure so low and become further efficient at commodity PCs as a sustainable business strategy for so long.   They also were last to the game with a meaningful outsourcing services offer.   Lastly, they also needed vertical industry practices to gain more business user relevance (and stop selling on price & feature/function to the IT Director).   So, Perot brings them all of those things, with a stated focus and successful history in a couple of big verticals (gov’t. and healthcare).

It just seems to me like Dell paid a HUGE price for this (60%+ premium over current stock value).   But the clock was ticking.

Channel Complexity – Vendor/Partner Marriage Counseling

By Beth Vanni – Director, Market Intelligence

When psychologists ask most married couples about what creates conflict in their marriage, there is often a classic gender gap in perceptions.  Women will often talk about lack of sharing, communication and having joint goals — those long-term things in a marriage that create meaningful bonds.  Men will often talk about arguments over money and not enough physical intimacy (OK, sex).   The day to day “glue” of a marriage that keep the wheels on the bus.   Not that I’m trying to indict the male species, but this classic gender-based delta in needs feels much like the results from our recent research study focused on Channel Complexity.   Let me explain ….

The goal of our research was to identify what areas of channel programs and processes caused partners the most cost, wasted time and generally infuriated partners  about their leading vendor’s programs.  We then compared those responses to the vendor’s own perception of where they felt they could improve in their ease-of-doing-business quotients.   The results were fascinating – much like a marriage counseling session.   Beyond the one resoundingly common complexity issue of managing training and certification requirements, the wish list of things to simplify seemed quite divergent.